USING PRIVATE RISK MANAGEMENT INSTRUMENTS TO MANAGE COUNTER-CYCLICAL PAYMENT RISKS UNDER THE NEW FARM BILL

This research evaluates whether or not hedging strategies using call options on the New York Board of Trade cotton futures can be effectively used to protect the new counter-cyclical payment on cotton. Results indicate that some level of counter-cyclical payment hedging is optimal for risk averse decision makers. Optimal hedge ratios depend on planting time expectations of the marketing year average price as well as on what crop, if any, has been planted on the base acres receiving the counter-cyclical payment.


Issue Date:
2003
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/18975
Total Pages:
19
Series Statement:
2003 Conference, St. Louis, Missouri, April 21-22




 Record created 2017-04-01, last modified 2017-04-26

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