Effects of Contract Provisions on the Success of a Futures Contract

Mark J. Powers

American Journal of Agricultural Economics, 1967, vol. 49, issue 4, 833-843

Abstract: This article investigates the effect of contract provisions in attracting hedgers to a futures market. The new pork bellies futures contract initiated in 1961 resulted in very light trading during the first 18 months. Six provisions of the contract which caused dissatisfaction among traders were those dealing with shrinkage allowance, limitations on storage time, grades and standards, transportation allowance, methods of storage protection, and delivery time. After these provisions were revised in 1962 and 1963 in such a way as to bring them into closer correspondence with trade practices, hedger utilization increased rapidly and steadily.

Date: 1967
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:49:y:1967:i:4:p:833-843.

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