Food security in LDC's: cost of alternative cash and futures strategies

Abstract

The feasibility of Less Developed Countries (LDC) using the U.S. wheat futures market as an alternative strategy to reduce the cost of maintaining a more stable supply of food grains was investigated. India was used as a case study.

A technical trading strategy for wheat futures, involving moving averages, was employed. Results from this technical approach were compared with more traditional approaches involving storage operations, periodic buying of grain needs, and a hedging strategy based on reports of world and India crop expectations. Both hedging strategies reduced the cost of securing wheat to offset production shortfalls. The technical hedging strategy was the superior approach.