Ledger Provision in Hog Marketing Contracts

David Hennessy and Donald Lien

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Price-dependent loan agreements at low interest rates have sometimes been included in North American hog sector long-term marketing contracts. We show that a general form of this stipulation can be viewed as a hybrid between a forward rate agreement and a bundle of commodity spot options. In some cases, the provision amounts to a commodity swap. These observations provide an approach to valuing the provision. Historical data are used to estimate expected payouts to the producer under the contract feature.

Date: 2003-07-01
New Economics Papers: this item is included in nep-agr
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Published in Agricultural Finance Review, Spring 2006, vol. 66 no. 1, pp. 77-89

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Related works:
Journal Article: Ledger provision in hog marketing contracts (2006)
Working Paper: Ledger Provision in Hog Marketing Contracts (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10645

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