Wholesale Beef Futures Contract
Thompson, Robert Stanley
Maples, Joshua G.
A wholesale beef futures contract has been suggested as a possible solution to recent problems in live cattle futures. However, it is uncertain whether the new futures contract will outperform the existing contract. In this research, I develop methods to derive a price series that is theoretically sound for a hypothetical futures contract. This allows for the evaluation of this hypothetical wholesale beef futures contract. I test these methods for validity using futures markets for hogs and find that they are similar in accuracy to a futures valuation model for existing futures. Then I derive a price series for this hypothetical wholesale beef futures contract and evaluate its effectiveness as a risk management tool.