Whether cattle futures today remain an effective tool for price risk management depends mightily on whom you talk to, and whether you're talking about live cattle or feeder cattle futures."Feeder cattle futures have become increasingly volatile in ways that often appear unrelated to market fundamentals," says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. "Erratic futures price movements and increasedbasis volatility makes it difficult or impossible for the industry to use feeder futures for its two primary roles ofrisk management and price discovery."
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