Implications of crop yield and revenue insurance for producer hedging

New types of crop insurance have expanded the tools from which crop produce rs may choose to manage risk. Little is known regarding how these products interact with futures and options. This analysis examines optimal futures a nd put ratios in the presence of four alternative insurance coverages. An a nalytical model investigates the comparative statics of the relationship be tween hedging and insurance. Additional numerical analysis is conducted whi ch incorporates futures price, basis, and yield variability. Yield insuranc e is found to have a positive effect on hedging levels. Revenue insurance t ends to result in slightly lower hedging demand than would occur given the same level of yield insurance coverage.