Explain how a negative correlation between agricultural production and commodity prices creates a natural hedge.

Name: Explain how a negative correlation between agricultural production and commodity prices creates a natural hedge.
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Question

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The Answer is The goal of hedging is to level the volatility in cash flows.The increased revenue,which accompanies higher output,will be offset by lower prices.Lower output and revenue,in turn,is offset by higher prices,thus,a natural hedge.

Explain How a Negative Correlation Between Agricultural Production and Commodity