How Reliable are Hog Futures as Forecasts?
Posted: 16 Aug 2006
Date Written: June 2006
The CME hog futures contract was revamped in 1997 and it is one of the largest futures markets for a nonstorable commodity. The literature is divided on whether or not futures prices for nonstorables provide reliable forecasts of cash prices. Using a time series econometric approach we find that from 1998-2004 the hog futures market was a good and unbiased predictor of cash prices.
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