Hedging Break-Even Biodiesel Production Costs Using Soybean Oil Futures

Johannes Graf, Andrew McKenzie and Michael Popp

Journal of Agribusiness, 2008, vol. 26, issue 01, 15

Abstract: The effectiveness of hedging volatile input prices for biodiesel producers is examined over one- to eight-week time horizons. Results reveal that hedging break-even soybean costs with soybean oil futures offers significant reductions in input price risk. The degree of risk reduction is dependent upon type of hedge, naïve or risk-minimizing, and upon time horizon. In contrast, cross-hedging break-even poultry fat costs with soybean oil futures failed to reduce input price risk.

Keywords: Agribusiness; Demand and Price Analysis; Environmental Economics and Policy (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:ags:jloagb:90553

DOI: 10.22004/ag.econ.90553

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