Mailbox milk prices from a representative dairy operation in Illinois are used to gauge the farm-level hedging effectiveness of Class III milk futures. The results indicate a hedge ratio of 0.85 can reduce price risk by over 90%. The importance of seasonal basis components is highlighted.

The marginal forecast information contained in deferred futures prices is evaluated using the direct test of Vuchelen and Gutierrez. In particular, the informational role of deferred futures contracts in live cattle and hogs is assessed from the two- to twelve-month horizons. The results...

Conventional wisdom suggests the local cash - futures basis is determined from local supply and demand conditions. However, it may be the case that local elevators look to other locations, such as terminal locations, and adjust for transportation differentials when determining the basis for...

An organizational perspective is taken in analyzing the general case of the biomass exchange and the specific case of the Iogen Corporation as it attempts to commercialize their cellulose ethanol technology. An example contract is examined in detail and compared to current straw and hay supply...

During 2006 the fishmeal price nearly doubled from $500MT to over $900MT. The objective of this research is to determine the optimal cross-hedge ratio between fishmeal and soybean meal and corn, and corresponding hedging weight between corn and soybean. Results indicate all hedging weight should...

One-step-ahead forecasts of quarterly crude oil, natural gas, electricity, and coal supplies are evaluated under two general approaches: accuracy-based measures and classification- or directional-based measures. Results suggest the U.S. Department of Energy (DOE) supply forecasts for U.S....

Decisions made by publicly traded agribusinesses impact suppliers, processors, farmers, and even rural communities. Professional analysts’ estimates of earnings per share (EPS) provide a unique source of information regarding firm-level financial performance. Incorporating a battery of tests,...

The traditional necessary condition for futures market inefficiency is the existence of alternative forecasting methods that produce mean squared forecast errors smaller than the futures market. Here, a more exacting requirement for futures market efficiency is proposedforecast encompassing....

One-step-ahead forecasts of quarterly beef, pork, and poultry production are examined and evaluated based on traditional criteria for optimality-efficiency and unbiasedness-as well as their performance versus a univariate time-series model. However, traditional regression methodology for...

This research examines the potential basis behavior and hedging effectiveness for the Minneapolis Grain Exchange's (MGE's) cash settled corn contract. MGE futures cash settle to the National Corn Index (NCI) calculated by the Data Transmission Network (DTN). Focusing on seven regions in...