Calculation of Optimum Hedge Ratio for Imported Inputs: Soybean Meal

Document Type : Original Article

Authors

1 Associate Professor of Agricultural Economics, University of Tabriz, Tabriz, Iran

2 MSc Student of Agricultural Economics, University of Tabriz Tabriz, Iran

3 Professor of Agricultural Economics, University of Tabriz, Tabriz, Iran

Abstract

The production of poultry and eggs are depended to many factors. Soybean meal is the main input for poultry industry. Participate in the futures market or operate a futures market, in Iran, as hedging instruments, creates ensuring from expected revenues and decrease volatility of inputs and products price in manufacturing plants. Therefore, the main objective of this study was to calculate the hedging rate with using two models: “Minimum-variance” and “Mean-variance”. The results show that with the purchase of 121% of the soybean meal from futures markets 61% of the input price risk is reduced. According to the results, the hedging ratio increases with entering the exchange rate to model, but without increase of hedging instruments, the efficiency of hedging ratio decreases.

Keywords

References

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