Risk return of forward contracting corn with crop insurance
Abstract
Abstract Forward contracting is a common pre‐harvest marketing strategy for row crops, with evidence suggesting higher prices during summer months due to embedded weather risk premiums. While aggressive forward contracting increases farmers' yield risk and potential non‐delivery penalties, crop revenue protection can help offset these financial burdens. This study employs a prototypical simulation approach with a Gaussian copula for yield‐price correlations, using the expected utility framework and certainty equivalent analysis to quantify risk returns for various forward contracting and crop insurance strategies. The findings of this study have implications for risk management education and the development of integrated agricultural policies that consider the interplay between forward contracting and crop insurance.
Fields of Study & Subjects
Agricultural risk and resilience
Climate change impacts on agriculture
Agricultural Economics and Policy
Publication details
- Journal / source
- Journal of the Agricultural and Applied Economics Association
- Publisher
- Wiley
- Volume
- 5
- Issue
- 2
- Pages
- 139–153
- Publication date
- 6 April 2026
- Language
- EN