Library
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Summary
Although most hedgers do not actually make delivery on a live hog futures contract, it is the threat of delivery that makes hedging an effective market risk reduction technique. Normally, to fulfill the futures obligation, a producer buys an offsetting futures contract rather than making delivery. Actual delivery on a futures contract should occur only when the basis during contract maturity is wider than anticipated -- and greater than the delivery costs.
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Details
Organization
University of Nebraska Extension Publisher
University of Nebraska Published
January, 1984 Material Type
Written Material -
Filed Under
