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Title: A study of futures and cash prices of beef cattle : relating theory to fact for a nonstorable commodity 
Author: Blank, Steven Charles
Date: 1980
Abstract: The relatively short period of time that nonstorable commodities have been traded on futures markets has not allowed researchers much opportunity to develop a theoretical basis for analysis. Therefore, the major objective of this study was to test the economic validity of cattle futures markets and to provide a basic foundation for a futures price theory of nonstorable products by considering the questions: how are cattle futures prices determined?, and are cattle futures prices accurate predictors of cash cattle prices? Conclusions were reached related to both the pricing and hedging functions performed by feeder and live cattle futures markets. The general hypothesis of pricing accuracy in the live cattle and feeder cattle futures markets was not rejected overall. There was some statistical evidence of accuracy in the markets' pricing performances during periods when stable price trends existed. It was concluded that the pricing function performed by beef cattle futures markets was accurate in determining the direction of price movements only. It was also concluded that the hedging potential offered by beef cattle futures markets is limited by the predictability of cattle basis patterns, but some hedging potential 12 offered. It was found that cattle futures prices move together with somewhat regular spreads between various contracts and follow the cash price trend existing during much of each season. Another conclusion was that predictive models for feeder cattle futures prices can use live cattle futures prices as a significant variable because the two prices are related through the "one market-one price" theory. Models of feeder cattle cash prices must use local supply and demand variables and not include futures prices as a variable because cash and futures prices of cattle are not part of the same pricing system. And finally, it was discovered that neither live nor feeder cattle fit the description of a perfectly storable or perfectly nonstorable commodity. Therefore, a simple price theory for "semi-storable" commodities \VB.S proposed. In that theory opportunities for arbitrage create the price correlation to be used in determining the level of "storability" of a product.
Description: Photocopy of typescript. Thesis (Ph. D.)--University of Hawaii at Manoa, 1980. Bibliography: leaves [127]-129. Microfiche. viii, 129 leaves, bound 28 cm
Rights: All UHM dissertations and theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission from the copyright owner.
Keywords: Beef cattle -- Prices, Cattle trade

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