Strategies to Capture Higher Gross Revenues

Abstract

Research on futures price behavior indicates that farmers may find it feasible to use selective hedging or forward contracting to increase gross receipts from the sale of their commodities. University economists have been telling farmers for many years that selective hedging-hedging only in some years rather than all years or no years -- should not be considered as an alternative to hedging every year or never hedging. If selective hedging is to be a feasible strategy for farmers, they must have some system for correctly predicting the direction of futures price changes during the production period in most years.