publication . Other literature type . Article . 1992

Livestock Futures Markets And Rational Price Formation: Evidence For Live Cattle And Live Hogs

Koontz, Stephen R.; Hudson, Michael A.; Hughes, Matthew W.; Koontz, Stephen R.; Hudson, Michael A.; Hughes, Matthew W.;
English
  • Published: 01 Jan 1992
  • Publisher: Unknown
Abstract
<jats:title>Abstract</jats:title><jats:p>The efficiency of livestock futures markets continues to receive attention, particularly with regard to their forward pricing or forecasting ability. The purpose of this paper is to present a more general theory that encompasses the forward pricing concept. It is argued that futures contract prices for competitively produced nonstorable commodities, such as live cattle and live hogs, follow a rational formation process. Futures contract prices reflect expected market conditions when contracts are sufficiently close to the delivery month that the supply of the underlying commodity cannot be changed. However, prior to the p...
Subjects
free text keywords: Demand and Price Analysis, Livestock Production/Industries,, Demand and Price Analysis, Livestock Production/Industries, Agricultural and Biological Sciences (miscellaneous), Economics and Econometrics, Risk management, business.industry, business, Forward price, Economics, Commodity, Futures contract, Competitive equilibrium, Hedge (finance), Financial economics, Forward market, Normal backwardation, Microeconomics
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