Library

Introduction to Hedging Agricultural Commodities With Options

Marty Foreman, Joe Parcell and, Vern Pierce (December, 2020)

Summary

Producers of agricultural commodities regularly face price and production risks. Furthermore, increased global free trade and changes in domestic agricultural policy have increased these risks. As the variability of price increases the variability of revenue, producers are realizing the importance of risk management as a component of their management strategies. One means of reducing these risks is through the use of the commodity options exchange markets.