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Management Economics

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

Authors
  • John D. Lawrence (Iowa State University)
  • Zhi Wang (Iowa State University)

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 used a ledger account to ensure that prices average the same as the cash market over the long run.

Keywords: ASL R1504

How to Cite:

Lawrence, J. D. & Wang, Z., (1998) “Systematic Hog Price Management: Selective Hedging and Long-Term Risk Sharing Packer Contracts”, Iowa State University Animal Industry Report 1(1).

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Published on
1998-01-01

Peer Reviewed

License

Creative Commons Attribution-NonCommercial 4.0