Analysis of agricultural hedge transactions and their market efficiency in the Budapest Stock Exchange

The second highest risk factor for agricultural enterprises is the price risk. Hedge transactions for agricultural risk management remarkably less used than in Western Europe or in the USA. Efficient operation of the commodity exchange is essential for eliminating price risk.
The results confirm the weak form of the market efficiency, which means that – from this point of view – the market is applicable to the eligible risk management, albeit the level of efficiency is lower than the more developed equity exchange. The liquidity and the efficiency of the market could be improved by agricultural enterprises which are aware of and capable of using ways to mitigate risks.