Download or read book An Analysis of Hedging Soft White Wheat Using the Chicago Wheat Futures Market written by Robert Louis Levy and published by . This book was released on 1973 with total page 336 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1970, the Pacific Northwest (PNW) produced approximately 145,332,000 bushels of wheat (all types) with an average harvest value of over $220,000,000. White wheat comprised about 126,234,000 bushels of that total, about 87 percent. In recent years the financial circumstances, for several reasons, have deteriorated for many farmers and grain handlers in the PNW. The reduced incomes have stimulated renewed exploration for some means of increasing revenues and/or stabilizing net prices received. The effective marketing of wheat in other areas of the U.S. involves the use of wheat futures markets. PNW producers and handlers of White wheat have not generally had this opportunity because the White wheat is not deliverable on existing futures contracts. Consequently, it is desirable to evaluate the feasibility of utilizing existing wheat futures contracts in spite of nondelivery. If the White wheat price patterns move in favorable relation to the price of deliverable wheats, then nondelivery may not preclude effective hedging. A one cent per bushel gain by successful hedging would add about 1.3 million dollars annually to producer income for White wheat in the PNW. Results for a ten year period indicate there are certain hedging strategies which appear to be profitable to PNW White wheat traders. The December wheat futures cortract prcvids long term gross benefits (not considering transaction costs or holding costs) of 5 to 7 cents per bushel on short hedges opened between the first week in March and the third week in March, and closed in the second or third week of May. Short hedge benefits for March futures averaged about 7 to 9 cents per bushel with opening dates between the first and third week of September and closing dates between the third week of January and the first week of March. Corresponding results for short hedges with May futures are 12.5 to 14.5 cents per bushel with opening dates between the last week of July and the last week of September and closing dates between the last week of April and the second week of May; and for the July and September futures, 8.5 to 10.5 cents per bushel with opening dates from the second week of October to the second week of November and closing dates between the second and third weeks of May. The optimum short hedges, all of which fall within the above indicated dates, were profitable nine out of ten years for May futures; eight out of ten years for December, July and September contracts, and seven out of ten years for March contracts. Long hedging strategies were not found to be as frequently profitable--eight out of ten years for July contracts; seven out of ten years for May contracts; six out of ten years for December and March contracts and five out of ten years for September contracts. Optimum long hedges using December futures provided 8.7 to 10.7 cents per bushel with opening dates between the second and third weeks of May and closing dates between the first week of July and the third week of September; for March futures, 10 to 12 cents per bushel with opening dates between the second and third weeks of May and closing dates between the first and third weeks of September; for May futures, 2.5 to 3.5 cents per bushel with opening dates between the second and fourth weeks of June and closing dates between the second week of August and the third week of September; for July futures, 7.5 to 9.5 cents per bushel with opening dates between the second and third weeks of May and closing dates between the first and second weeks of July; and for September contracts, 9. 3 to 11. 3 cents per bushel with opening dates in the second and third weeks of May and closing dates in the second week of September. In several instances, profits or losses were generated in both the cash and futures transactions, indicating that while several of the optimum strategies did generate overall profitable results, the hedge would really need to be considered a "speculative hedge" rather than a "traditional hedge" wherein cash and futures losses and gains are generally offsetting to at least some extent.
Download or read book An Analysis of the Feasibility of Establishing a Pacific Northwest White Wheat Futures Contract written by Norbert Sylvester Ries and published by . This book was released on 1972 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: Individuals in the soft white wheat industry in the Pacific Northwest are looking for new marketing tools which will be helpful for their operations and reduce some of their risk. During the past 18-24 months their interest has centered on the commodity futures market, where they would like to see a wheat futures contract established that would offer adequate hedging potential for the Pacific Northwest. Two conferences have been sponsored (May 25, 1971 and July 7, 1971) at the Dalles, Oregon, by the Oregon Wheat Growers League to discuss this topic. For an objective analysis of the desire and need for such a futures contract and of its potential for success, data on supply, demand, and prices were helpful but not entirely adequate. An industry questionnaire similar to the questionnaire technique (Delphi) developed by RAND corporation for forecasting future technological changes was used. The results were two-fold. Other than just forecasting technology and target dates, the Delphi technique probed opinions and attitudes of the industry. It was determined that the demand for soft white wheat is changing. Some countries are reducing their demand while other countries are expanding their demand. Also present is the possibility of creating new markets. With this uncertainty present in the demand for soft white wheat, along with the advent of increased risk as a result of expansion in operation size, the industry panel indicated a desire and need for a futures contract appropriate for their industry. With soft white wheat fulfilling the characteristics traditionally thought necessary for a market and its commodity to succeed as a futures contract, all that remains is attracting the proper interest, both commercially and speculative; and providing a contract with terms favorable to both the industry and the speculator. Close coordination between the soft white wheat industry and the Chicago Board of Trade should lead into good contract conditions. Commercial interest does exist but the hedger will have to be educated on the use of the futures contract. Deciding when to get into the market, deciding whether to buy or sell, is just a start. It requires time to watch the market, manage its use, and integrate it into one's operation. With this accomplished, speculative interest should be attracted. The attributes often cited as necessary for successful futures trading are not necessarily required for a successful futures market. The number of characteristics a market and its commodity has will not guarantee its success, and if any characteristics are lacking, does not mean assured failure. With all factors considered, soft white wheat does seem to have as much potential of being successfully traded as any commodity now traded.
Download or read book Hedging in Grain Futures written by Joseph Martin Mehl and published by . This book was released on 1931 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book An Analysis of Relations Among Central market Wheat Prices with Special Reference to the Impact of the Government Loan Program written by Rollo Lee Ehrich and published by . This book was released on 1964 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Intertemporal Basis Behavior on the Chicago Wheat Futures Market written by Terence Charles Sheales and published by . This book was released on 1982 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Impressions Concerning Country Trading in Grain Futures with Especial Reference to Wheat Futures written by Harold Speer Irwin and published by . This book was released on 1936 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Pacific Northwest Wheat Market and Futures Trading written by John Nairn and published by . This book was released on 1961 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Hedging by Dealing in Grain Futures written by George Wright Hoffman and published by . This book was released on 1925 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Relationship Between Daily Price Range and Net Price Change Opening to Close of the Dominant Wheat Future and the Daily Volume of Trading in Wheat Futures on the Chicago Board of Trade written by United States. Grain Futures Administration and published by . This book was released on 1935 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Temporal Price Relationships in Cash Forward and Futures Markets for White Wheat written by Santisuk Sanguanruang and published by . This book was released on 1986 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt: Forward pricing is a marketing tool available to Pacific Northwest white wheat growers for reducing price risk. The cash forward contract is the traditional pricing mechanism used for this purpose. In September 1984, another option for forward pricing was made available through the introduction of a new futures market for white wheat traded at the Minneapolis Grain Exchange. This research analyzes price behavior in these two forward pricing markets in 1985 from two perspectives. Using the efficient market hypothesis, this study first evaluates the temporal price relationships in each market. Second, the research measures the relationships between the two markets in light of the concept of causality. Prices in an efficient market should reflect all available information. In this research, the weak form test for the efficient market hypothesis, known as the random walk model, assessed pricing efficiency in both markets. The random walk hypothesis holds when successive price changes are independent. Based on the evidence of statistically insignificant autocorrelation coefficients, the futures market was efficient under the random walk hypothesis. There were no systematic patterns in the price movements. In contrast, in all delivery time periods except December, the cash forward market exhibited nonrandomness in price changes. The analysis on the relationship between the two markets was made using Granger's definition of causality. Using ordinary least squares regression, this research evaluated the causal link between the two price series with two parallel tests, the direct Granger's and the Sims'. Strong causality ran from futures prices (FT) to cash forward prices (CF) in the September harvest time delivery period. Some causality from FT to CF lingered into the December and March storage month delivery periods. There were no causal relationships in other delivery periods except a feedback from CF to FT in the March period. Despite low trading activity, futures prices were found to represent an efficient market. Thus, they accurately reflected market signals concerning the supply of, and demand for, white wheat. On the contrary, nonrandomness found in cash forward prices suggests inefficiency in this market. The causality found from FT to CF is consistent with the expectation. Farm level forward pricing activity is greatest for harvest (August/September) and immediate post-harvest delivery months. This causes buyers of cash forward contracts to pursue price risk management. Thus, futures prices were used as references, or hedges, in setting cash forward prices in these delivery time periods. The irregular causality pattern between the two markets implies a changing market environment, possibly caused by differing price determination processes over time. Serial dependence in cash forward prices may be providing misleading signals about the white wheat market. However, the weak form test used here could not estimate the magnitude of the inefficiency.
Download or read book Hedging Australian Wheat Exports on U S Futures Markets written by Terence Charles Sheales and published by . This book was released on 1985 with total page 514 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Hedging in the Futures Market written by Rollin Edson Smith and published by . This book was released on 1919 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Hedging Effectiveness of U S Wheat Futures Markets written by William W. Wilson and published by . This book was released on 1982 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Bulletin written by and published by . This book was released on 1964 with total page 454 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Seasonal Tendencies in Wheat Futures Prices written by Harold Speer Irwin and published by . This book was released on 1936 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Wheat Futures written by and published by . This book was released on 1930 with total page 780 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Analysis of Selected Basis Relationships for Spring Wheat written by Dennis Colvin and published by . This book was released on 1981 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
