They Trade Shrimp in Minneapolis? An Examination of the MGE White Shrimp Futures Contract

Dwight R. Sanders and Joost M. E. Pennings

No 285754, 1981-1999 Conference Archive from NCR-134/ NCCC-134 Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: The successful introduction of risk management products to industries unfamiliar with futures markets (e.g., dairy, aquaculture, and environmental resources) is likely to become increasingly important as futures exchanges consider alternative structures (e.g., for-profit) and the trading platform evolves (i.e., electronic trading). Here, we examine the performance of the Minneapolis Grain exchange's white shrimp futures contract, one of the first futures contracts aimed at the aquaculture industry. Although the market structure conforms to most of the traditional criteria for a successful futures contract, the contract's performance is disappointing in terms of liquidity and hedging effectiveness. It is not clear if this is due to a poorly designed contract or a lack of participation (i.e., cash-futures arbitrage) required for convergence and a predictable basis.

Keywords: Marketing (search for similar items in EconPapers)
Date: 1999-04
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nc8191:285754

DOI: 10.22004/ag.econ.285754

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