Futures spread risk in soybean multiyear hedge-to-arrive contracts

Article Abstract:

Analysis of the futures spread risk involved in soybean multiyear hedge-to-arrive (HTA) contracts provides a quantitative description of the monetary risks that arise from such contracts. This study examined the old crop-new crop futures price spreads from 1948 to 1997 and related monetary risks that go with making the transition from old crop to new crop futures contracts. Findings revealed that the chance of having a negative old crop-new crop spread is about 75% for all the years covered although a 100% probability was found for the high-price years. Therefore, a multiyear HTA is not a reliable hedge.

Securities and Commodity Exchanges, Security and commodity exchanges, Commodity Exchanges, Soybean Farming, Soybeans, Research, Commodity futures, Futures, Soybean

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Vertical coordination in the U.S. pork industry: status, motivations, and expectations

Article Abstract:

The pork industry is experiencing an increase in vertical coordination between producers and packers. Study shows that the increase in coordination resulted due to threats of market risk, opportunism, and rising transaction costs in pork industry. Vertical coordination is expected to elevate the competitiveness of pork industry in world market through product quality improvement, and increased consumer need for pork products. An increase in the demand for inputs related to pork products such feed grains and labor is also expected due to broadening of the market share of pork industry.

Analysis, Vertical integration

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Improving wholesale beef and pork product cross hedging

Article Abstract:

Forward pricing and cross hedging practices used by pork and beef products wholesalers have had poor results because the inappropriate hedging models have been followed. The standard price ratio model which is used by meat packers and merchandisers do not generate good fits for meat cuts. The industry should consider using other cross hedge models to improve the current performance. Comparative studies of the current model with models such as the conditional hedging developed by Myers and Thompson and modified by Viswanath show that there are better alternatives.

Other Edible Beef, Evaluation, Hedging (Finance), Beef, Beef industry

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