Abstract
Soybean meal futures contracts have been shown to be effective cross-hedges for managing fishmeal price risk. Recent supply shocks and growth of aquaculture, poultry, and hog production, where nutrient requirements limit substitution of soybean meal for fishmeal more so than in cattle diets, may be undermining the historical price relationship. Advances in protein content of corn byproducts like corn gluten meal or distiller dried grains suggest corn futures contracts may offer an additional cross-hedging opportunity. We find a composite hedge using both corn futures contracts and soybean meal futures contracts offers superior hedging effectiveness.
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