Why Do Hedgers Trade So Much? [report]

Ing-Haw Cheng, Wei Xiong
2013 unpublished
Futures positions of commercial hedgers in wheat, corn, soybeans and cotton fluctuate much more than expected output. Hedgers' short positions are positively correlated with price changes. Together, these observations raise doubt about the common practice of categorically classifying trading by hedgers as hedging while trading by speculators as speculation, as hedgers frequently change their futures positions over time for reasons unrelated to output fluctuations, arguably a form of
more » ... * We are grateful to Jose Scheinkman and Glen Weyl for helpful comments. † Tuck School of Business, Dartmouth College,
doi:10.3386/w19670 fatcat:bghh3mvzg5dvpk7vpa7gdjnjm4