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Cost of Forward Contracting Wheat in Kansas

Mykel Taylor, Kevin Dhuyvetter and, Glynn Tonsor (November, 2013)

Summary

Farmers looking to eliminate pre-harvest price risk can choose between using the futures market and forward contracting. Their choice is likely to be influenced by the relative cost of these two alternatives. The cost of hedging includes margin expenses, liquidity costs, brokerage fees, and added paperwork.