Inventory and Transformation Hedging Effectiveness in Corn Crushing

Recently developed ethanol futures contracts now allow direct-hedging by ethanol producers. This study examines the effectiveness of one-through eight-week hedges between 2005 and 2008. Our findings show (a) ethanol inventory hedging effectiveness is significant for two-week and longer hedges, and increases with the hedging horizon; (b) ethanol futures are significantly superior to gasoline futures for hedging ethanol price risk for two-week and longer hedges; (c) the corn crushing hedge, utilizing corn and ethanol futures, is effective and provides price risk management capabilities comparable to those provided by the soybean crush hedge.


Issue Date:
2009-04
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/50081
PURL Identifier:
http://purl.umn.edu/50081
Published in:
Journal of Agricultural and Resource Economics, Volume 34, Number 1
Page range:
154-171
Total Pages:
18




 Record created 2017-04-01, last modified 2018-01-22

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