Some extension economists and others recommend profit margin hedging as a way to choose the timing of crop sales. However, the theory behind this strategy recommendation is not well developed. This article determines the producer's utility function and price processes where profit margin hedging...

Since decisions to sell grain are irreversible, waiting to sell grain can have a real option value. This real option value may explain why producers appear to store too long. A new seasonal mean reversion model is estimated that allows prices to be a random walk with drift within a season, but...

Some extension economists and others often recommend profit margin hedging in choosing thetiming of crop sales. This paper determines producer’s utility function and price processeswhere profit margin hedging is optimal. Profit margin hedging is shown to be an optimalstrategy under a highly...

Previous studies suggest that producers tend to store crops longer than makes economic sense. Since decisions to sell are irreversible, there can be a real option value from waiting to sell grain. This real option value may explain why producers appear to store too long. A seasonal mean...

Some extension economists and others often recommend profit margin hedging in choosing the timing of crop sales. This paper determines producer’s utility function and price processes where profit margin hedging is optimal. Profit margin hedging is shown to be an optimal strategy under a highly...