Kandice H. Kahl

Determination of the Recommended Hedging Ratio

The traditional literature on commodity futures markets defined a hedge as a futures market position which is equal but opposite to the individuals cash market position. More recent studies have recognized that the futures market position need not equal the cash market position to constitute a hedge. Many researchers have theoretically solved for the optimal futures and cash market positions. For example, Heifner, Johnson, Ward and Fletcher, and Telser determined the optimal futures and cash market positions simultaneously. Peck determined the optimal futures market position, assuming that the cash market position was given. The formulas for the optimal futures and cash holdings differ from study to study because of the different underlying assumptions. However, general implications can be deduced from these studies concerning the size of the optimal hedging ratio (i.e., the ratio of the optimal futures position to the optimal cash position). In this paper, it is argued that the optimal hedging ratios consistent with the results obtained by Johnson, Ward and Fletcher, and Telser are identical to the optimal hedging ratio derived byHeifner (1972, 1973). The exercise provides a major implication for hedging strategy which is consistent with all of these studies-that the optimal hedging ratio is independent of the individuals risk aversion, even though the optimal positions are themselves not independent of the risk parameter. This implication is also valid for the minimum-risk hedging ratio, derived by Johnson, Ederington, and McKinnon. Finally, the optimal hedging ratio in Peck remains dependent on the risk parameter because the cash market position is assumed to be given.

Revenue Insurance for Georgia and South Carolina Peaches

We estimate actuarially fair premium rates for yield and revenue insurance for Georgia and South Carolina peaches. The premium rates for both products decrease at a decreasing rate as the mean farm-level yield increases. In general, the premium rate for revenue insurance exceeds the premium rate for yield insurance for a given coverage level and expected yield. Although the revenue and yield insurance rates differ in a statistical sense, they do not appear to differ in an economic sense except at high coverage levels for growers with very high yields.

The effects of relative price perceptions and demographic factors on restaurant catfish consumption

Using dichotomous logit analysis, the study measures the effects of relative price perceptions and demographic factors on the probability of restaurant catfish consumption in the United States. The study uses data from the 1988 Southern Regional Aquaculture Center Consumer Survey. Relative price perceptions, income, race, religion, urbanization, and region are found to be significant determinants of the probability of restaurant catfish consumption. The probability of consumption is higher among consumers in urban areas and the Central regions and lower among low income consumers, Hispanics, Catholics, and consumers in the New England and Mid-Atlantic regions.