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Feeder Cattle Futures - The Life of a Contract Comparing Expiration to Weekly Futures Prices

Lee Schulz and, Daniel Rittgers (July, 2015)

Summary

The Feeder Cattle futures market is a single location where anyone with an opinion on what prices will be in the future can essentially vote their forecast. The resulting futures prices represent a “composite” forecast at a particular point in time. However, futures markets trade on known information and react as new information becomes available. Research such as this has repeatedly shown that the futures are as accurate, or better, than other forecasting methods, but just how good of a predictor of the contract expiration price are weekly futures prices?