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Hedging Wholesale Meat Prices: Analysis of Basis Risk

Author

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  • Hayenga, Marvin L.
  • DiPietre, Dennis D.

Abstract

Hedging has long been recognized as a means by which the risks of price variability can be reduced. In the classic case, equal and opposite price risks for a given commodity are assumed in the cash and futures market so that the value of the gains in one market perfectly offset the losses in the other. Assuming equal and opposite price risks in two markets is made possible by the development of organized markets in the trading of futures contracts. A commodity futures contract is the instrument by which the transfer of price risk from hedgers to speculators is facilitated.

Suggested Citation

  • Hayenga, Marvin L. & DiPietre, Dennis D., 1982. "Hedging Wholesale Meat Prices: Analysis of Basis Risk," Staff General Research Papers Archive 11306, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:11306
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    Cited by:

    1. Tabesh, Hamid, 1987. "Hedging price risk to soybean producers with futures and options: a case study," ISU General Staff Papers 1987010108000010306, Iowa State University, Department of Economics.
    2. Schroeder, Ted C. & Yang, Xiaolou, 2001. "Hedging Wholesale Beef Cuts," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36091, Western Agricultural Economics Association.
    3. Marvin L. Hayenga & Bingrong Jiang & Sergio H. Lence, 1996. "Improving wholesale beef and pork product cross hedging," Agribusiness, John Wiley & Sons, Ltd., vol. 12(6), pages 541-559.
    4. Miller, Stephen E., 1983. "Simple and Multiple Cross-hedging of Millfeeds," Working Papers 116867, Clemson University, Department of Agricultural and Applied Economics.
    5. Blank, Steven C., 1985. "Price Dependence And Futures Price Theory," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 14(2), pages 1-8, October.

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