Risk Navigator SRM: An Applied Risk Management Tool

Table 2

Payoff matrix for EWS farms’ corn pricing decision; see source in [6].

			Whole Farm Returns for Management Alternatives
			no. 1	no. 2	no. 3
Outcome			Forward
Risk states	$\$$ /bushel corn	Probability	Cash market	Contract	Hedge
Normal crop	$\$$2.10/bu	.35	$\$$287,700	$\$$305,900	$\$$298,200
Short crop	$\$$2.50/bu	.65	$\$$342,500	$\$$332,700	$\$$339,000
Expected value			$\$$323,320	$\$$323,320	$\$$324,720
Standard deviation			$\$$38,749	$\$$18,900	$\$$28,850