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Comparative analysis of cash margin hedging strategies with commodity futures contracts and options
The performance of futures contracts and commodity
options as hedging instruments were compared in a cash
margin hedging framework for a 150 sow farrow to finish
hog operation in southeastern Virginia. The expected cash
margin (ECM) using corn soybean meal and hog futures were
calculated daily from 1975 through 1982. The performance
of options and futures were compared in 530 strategies that
ranged from starit routine fixed margin hedging to
strategies based on forecasted variable margins.