Comparison of Hedging Cost with Other Variable Input Costs

John Michael Riley and John Anderson

No 53045, 2009 Conference, April 20-21, 2009, St. Louis, Missouri from NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: Recent spikes in commodity prices have led to higher margin amounts and option premiums. For the most part, producers have always attributed their lack of use in reducing risk via futures and options markets to the high cost associated with the use of these markets. This study determines the relative costs of hedging with futures and options and compares these with the costs of other variable inputs. We find that with the exception of hedging corn with both tools and soybeans with options the costs of hedging has only increased at roughly the same rate as all other inputs.

Keywords: Agribusiness; Agricultural Finance; Demand and Price Analysis; Farm Management; Marketing; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 12
Date: 2009-04
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Citations: View citations in EconPapers (1)

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Journal Article: Comparison of Hedging Cost with Other Variable Input Costs (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nccc09:53045

DOI: 10.22004/ag.econ.53045

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