Ledger Provision in Hog Marketing Contracts

David Hennessy and Donald Lien

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: Some long-term marketing contracts in the North American hog sector provide for price-dependent loan agreements at low rates. We show that these provisions linking pricing with financing are hybrids between forward rate agreements and commodity options. This observation presents approaches for valuing the stipulations. We suggest that the ledger arrangement is transaction-cost efficient, especially for a packer with a natural partial pass-through hedge from retail market positions.

Date: 2003-06
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Ledger provision in hog marketing contracts (2006)
Working Paper: Ledger Provision in Hog Marketing Contracts (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ias:cpaper:03-wp336

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