HEDGING SPOT CORN: AN EXAMINATION OF THE MINNEAPOLIS GRAIN EXCHANGE'S CASH SETTLED CORN CONTRACT

This research examines the potential basis behavior and hedging effectiveness for the Minneapolis Grain Exchange's (MGE) cash settled corn contract. MGE futures cash settle to the National Corn Index (NCI) calculated by Data Transmission Network (DTN). Focusing on seven regions in Illinois, the data suggest that NCI Futures offer potential advantages over the existing Chicago Board of Trade (CBOT) corn futures. In particular, nearby basis variability could be reduced by nearly one-half from 8.8 cents per bushel to 4.5 cents per bushel, and hedging effectiveness may increase from an average of 80% for the CBOT to 93% for the NCI.


Issue Date:
2002
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/19064
Total Pages:
11
Series Statement:
2002 Conference, St. Louis, Missouri, April 22-23




 Record created 2017-04-01, last modified 2017-08-24

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