Cross Hedging Winter Canola

Abstract

Abstract. The growth in winter canola acreage in the southern Great Plains has led to questions about the best way to reduce price risk because there is no U.S. canola futures market. Cross-hedge ratios and hedging effectiveness are calculated, and encompassing tests are conducted for short-horizon hedging. Possible cross-hedge markets considered are U.S. soybeans, soybean oil, soybean meal, hard red winter wheat, and Canadian canola. The selected cross hedge is a combination of soybean oil and meal futures, but its hedging effectiveness is substantially less than what is typically provided by a direct hedge.

Can Crude Oil Futures Be the Good Hedging Tool for Tyre Equities? Evidence From India

“…Hence, to overcome this problem, Benninga et al (1983) suggested the use of the log return series in the regression model to avoid spurious constants in hedging. Dahlgran (2000) and Kim et al (2015) have used log return series to compute the hedge ratio using the OLS method. The general form of the OLS regression is shown in the following equation.…”

Hedging effectiveness of fertilizer swaps

“…Harri and Brorsen (2009) argue that the use of overlapping data introduces a moving average process which must be accounted for by modifying equation 2. Following techniques used by and Kim, Brorsen, and Yoon (2015), the regression equation for the hedging horizon k weeks can be written as:…”