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Optimal Hedge Ratios For Corn Marketing In Eastern South Dakota, Karen Brovold, Bashir Qasmi

Economics Research Reports

In the past, few South Dakota agricultural producers have made use of the futures market to manage their risk exposure. According to a survey, conducted in 1970, only eleven percent of South Dakota producers used futures contracts and five percent used options to market their grain (Shane). The need for producers to become more market-oriented has increased with the passage of the 1996 Freedom to Farm Act. The Freedom to Farm Act gives producers increased flexibility to adjust production based on market incentives. Prices are expected to become more volatile due to changing market conditions over the next few years. …