Dairy price risk management analysis

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dc.contributor.author Engelmann, Josh
dc.date.accessioned 2011-12-05T17:25:26Z
dc.date.available 2011-12-05T17:25:26Z
dc.date.issued 2011-12-05
dc.identifier.uri http://hdl.handle.net/2097/13209
dc.description.abstract The size of our dairy operation increased from 300 milk cows to 1,700 milk cows in 2003. Once the dairy operation increased, the dependency on milk price to support the entire operation also increased. This was due to the fact that the cropping side of the operation became more devoted to growing feed for the livestock as opposed to producing cash crops. Thus, the increase in the number of milk cows led to decreased diversity in our income potentially increasing the financial risk of the operation. The purpose of this thesis is to study different risk management tools and strategies to aid in the formulation of a risk management plan for milk sales in our operation. Risk management strategies using forward contracts, futures, put options, and cash were analyzed at different time periods and various minimum price levels. The strategies were analyzed over the last ten years (2001-2010) of available price data. Twenty-five risk management strategies were analyzed both with and without set minimum milk prices. Minimum price levels ranged from $14/cwt to $17/cwt in $1 increments. The time frame for the transaction ranged from zero to twelve months prior to production in three-month increments. Based on historical data, risk management strategies can be used to decrease the price risk faced by an operation. The risk management strategies did not affect the average price received at statistically significant levels typically considered. Different risk management opportunities are highlighted that need to be analyzed before fully implementing a risk management plan for dairy operations. en_US
dc.language.iso en_US en_US
dc.publisher Kansas State University en
dc.subject Dairy en_US
dc.subject Risk en_US
dc.subject Futures en_US
dc.subject Options en_US
dc.title Dairy price risk management analysis en_US
dc.type Thesis en_US
dc.description.degree Master of Agribusiness en_US
dc.description.level Masters en_US
dc.description.department Department of Agricultural Economics en_US
dc.description.advisor Kevin Dhuyvetter en_US
dc.subject.umi Agriculture, General (0473) en_US
dc.subject.umi Management (0454) en_US
dc.subject.umi Marketing (0338) en_US
dc.date.published 2012 en_US
dc.date.graduationmonth May en_US

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