Systematic Hog Price Management: Selective Hedging and Long-Term Risk Sharing Packer Contracts

John Lawrence and Zhi Wang

No 285690, 1981-1999 Conference Archive from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: In addition to futures and options markets, long-term risk sharing hog procurement contracts offered by packers provide some degree of price risk protection for pork producers. The window contract and a moving average hedging strategy generated similar average returns and level of profit risk protection. The cost-plus contract provided a greater degree of risk protection from prices below cost of production and uses a ledger account to ensure that prices average the same as the cash market over the long run.

Keywords: Marketing (search for similar items in EconPapers)
Date: 1997-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nc8191:285690

DOI: 10.22004/ag.econ.285690

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