Performance of Futures Markets: The Case of Potatoes

摘要

Futures trading in Maine-grown potatoes on the New York Mercantile Exchange (major trading market for potatoes) performed less effectively in determining potato prices and permitting hedging in the seventies because potato production changed and terms of futures contracts failed to adjust. The report's authors propose remedial measures, including use of a formula cash settlement, a major change from traditional methods of settling futures contracts. Cash settlements might also solve such problems for other commodities.