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Farm Use of Futures, Options, and Marketing Contracts

Author

Listed:
  • Prager, Daniel
  • Burns, Christopher
  • Tulman, Sarah
  • MacDonald, James

Abstract

Farming can be a risky endeavor. Weather, pests, and disease can diminish the output from a field or herd. Changes in prices can reduce revenues or increase costs. Farmers may manage the risks from market price fluctuations by using agricultural derivatives, such as futures and options contracts, and committing some production to marketing contracts. This study uses data from the 2016 Agricultural Resource Management Survey to describe the use of futures, options, and marketing contracts by producers, with a primary focus on corn and soybeans.

Suggested Citation

  • Prager, Daniel & Burns, Christopher & Tulman, Sarah & MacDonald, James, 2020. "Farm Use of Futures, Options, and Marketing Contracts," Agricultural Economic Reports 305690, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerser:305690
    DOI: 10.22004/ag.econ.305690
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    File URL: https://ageconsearch.umn.edu/record/305690/files/USDA%20Farm%20Use%20of%20Futures%2C%20Options%2C%20and%20Marketing%20Contracts.pdf
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    References listed on IDEAS

    as
    1. Heifner, Richard G. & Wright, Bruce H. & Plato, Gerald E., 1993. "Using Cash, Futures, and Options Contracts in the Farm Business," Agricultural Information Bulletins 309680, United States Department of Agriculture, Economic Research Service.
    2. McBride, William D. & Key, Nigel D., 2003. "Economic And Structural Relationships In U.S. Hog Production," Agricultural Economic Reports 33971, United States Department of Agriculture, Economic Research Service.
    3. Charles R. Knoeber & Walter N. Thurman, 1995. ""Don't Count Your Chickens...": Risk and Risk Shifting in the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 486-496.
    4. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    5. Prager, Daniel L & Tulman, Sarah & Durst, Ron, 2018. "Economic Returns to Farming for U.S. Farm Households," Economic Research Report 276224, United States Department of Agriculture, Economic Research Service.
    6. MacDonald, James M. & Hoppe, Robert A. & Newton, Doris, 2018. "Three Decades of Consolidation in U.S. Agriculture," Economic Information Bulletin 276247, United States Department of Agriculture, Economic Research Service.
    7. Key, Nigel & Prager, Daniel & Burns, Christopher, 2017. "Farm Household Income Volatility: An Analysis Using Panel Data From a National Survey," Economic Research Report 256710, United States Department of Agriculture, Economic Research Service.
    8. Daniel A. Sumner, 2009. "Recent Commodity Price Movements in Historical Perspective," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1250-1256.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. An N. Q. Cao & Michel A. Robe, 2022. "Market uncertainty and sentiment around USDA announcements," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(2), pages 250-275, February.
    2. Chad Fiechter & Todd Kuethe & Michael Langemeier & James Mintert, 2025. "Change in farmer expectations from information surprises in the corn market," American Journal of Agricultural Economics, John Wiley & Sons, vol. 107(1), pages 231-247, January.
    3. Utesov, Nurlan & Mitchell, Paul D. & Du, Xiaodong, 2024. "Product Differentiation and Equilibrium Transition: Local premium quality foods and marketing contracts in the Wisconsin fresh potato market," 2024 Annual Meeting, July 28-30, New Orleans, LA 343964, Agricultural and Applied Economics Association.
    4. repec:ags:aaea22:335598 is not listed on IDEAS
    5. Turner, Dylan & Tsiboe, Francis & Baldwin, Katherine & Williams, Brian & Dohlman, Erik & Astill, Gregory & Skorbiansky, Sharon Raszap & Abadam, Vidalina & Yeh, D. Adeline & Knight, Russell, 2023. "Federal Programs for Agricultural Risk Management," Economic Information Bulletin 340216, United States Department of Agriculture, Economic Research Service.
    6. William E. Maples & Anil K. Giri & Keith H. Coble & Dipak Subedi, 2022. "Impact of government programs on producer demand for hedging," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1126-1138, September.
    7. Pardeshi, Shefali & Loughrey, Jason & O’Connor, Declan, 2024. "Farm Investment and Adoption of Fixed Milk Price Contracts on Irish Dairy Farms," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344291, International Association of Agricultural Economists (IAAE).

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    Keywords

    Agribusiness; Marketing;

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