Using the Futures Market to Lower the Farm Management Risks of Producing for Unknown Market Prices in the USA: A Farm Example of a Maize Hedger
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This paper illustrates a simple hedging procedure for reducing
the risk of investing in production. costs . by locking in a predetermined
price range. The emphasis.is on planning and budgeting
before committing resources to production. Success is measured as
a return to management. The hedging methodology used in the paper
is applicable to.any agricultural enterprise where basis is known. It
is ·probably impossible to hedge successfally without a good ·
'f.'nderstanding of basis.