New publication by Xia, Crespi, and Dhuyvetter examines cattle contracts and market power
John Crespi, professor of economics at Iowa State University, Tian Xia, associate professor of agricultural economics at Kansas State University, and Kevin Dhuyvetter of Elanco were published in the most recent issue of the Canadian Journal of Agricultural Economics. Their article, “Could Packers Manipulate Spot Markets by Tying Contracts to Futures Prices? And Do They?” establishes that contract pricing terms tied to a cattle futures price can theoretically reduce the cash price. However, an examination of data from the U.S. cattle market shows that such linkages seem to have had only a small impact on prices thus far.
Xia, T., J. M. Crespi, K.C. Dhuyvetter. Could packers manipulate spot markets by tying contracts to futures prices? And do they? Canadian Journal of Agricultural Economics.
First published: 27 July 2018
(Released August 2018)