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Abstract

Hedging with a futures market is one risk management alternative available to producers of most agricultural commodities. However, such an option is unavailable to broiler growers as there are no active broiler futures. Over the last 40 years there were three occasions during which futures were available for broilers. Each of the three markets failed to catch on and were thus removed from trading. We investigate the reasons for the failures time and time again. Using an econometric model, we find that the presence of a relatively efficient cross-hedge was a major reason the broiler futures collapsed.

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