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Price Pooling and the Gains from Hedging: Application to a Swedish Grain Cooperative

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  • Johnson, D. Demcey
  • Nilsson, Tomas K.H.
  • Andersson, Hans

Abstract

Optimal hedging strategies are analyzed for a cooperative operating a price pooling system in the presence of price and quantity risk. A three-period model, accounting for default risk and storage, is developed. Hedging allows the cooperative to increase the pool price offered to farmers by 2.8 - 4% for moderate risk parameters.

Suggested Citation

  • Johnson, D. Demcey & Nilsson, Tomas K.H. & Andersson, Hans, 2001. "Price Pooling and the Gains from Hedging: Application to a Swedish Grain Cooperative," 2001 Annual meeting, August 5-8, Chicago, IL 20554, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20554
    DOI: 10.22004/ag.econ.20554
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    References listed on IDEAS

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    1. Dr. Joan R. Fulton & Dr. Michael Popp & Carolyn Gray, 1998. "Evolving Business Arrangements in Local Grain Marketing Cooperatives," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(1), pages 54-68.
    2. Robert J. Myers & Steven D. Hanson, 1996. "Optimal Dynamic Hedging in Unbiased Futures Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 13-20.
    3. Robert J. Myers & Stanley R. Thompson, 1989. "Generalized Optimal Hedge Ratio Estimation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 858-868.
    4. Stanley R. Thompson & Gary E. Bond, 1987. "Offshore Commodity Hedging under Floating Exchange Rates," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(1), pages 46-55.
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    Agribusiness; Marketing;

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