Speaker Richie Ma - Inside the "meat casino". How traders participate in Livestock Futures Markets
- Event Type
- Seminar/Symposium
- Sponsor
- FACS (Food Agriculture and Commodities Seminar) - Job Market Paper
- Location
- 428 Mumford Hall
- Virtual
- Join online
- Date
- Nov 12, 2025 12:00 - 1:00 pm
- Speaker
- Richie Ma, PhD Student, Dept ACE, University of Illinois
- Views
- 25
Abstract
Livestock price volatility largely arises from the inherently intertemporal nature of production, while market participants frequently manage these risks through calendar spread contracts––simultaneously trading multiple individual contract (leg) positions with different maturities of the same commodity. This paper examines the role of calendar spreads in shaping livestock futures trading during a recent period of heightened volatility, when markets were referred to as the “meat casino.” We find that calendar spread trading accounts for at least 30% of total trading volume in the most-traded contracts, offering lower trading costs and improved market liquidity compared with executing legs separately. Moreover, traders use calendar spreads to circumvent price limits that restrict one-sided trading in leg markets. Our price discovery results suggest that calendar spread markets contribute more to fundamental value and help keep corresponding legs anchored to the informative term structure. Meanwhile, leg markets adjust faster to new information, albeit with greater noise––consistent observed elevated volatility in individual contracts. Overall, although individual contracts may experience sharp price swings, their relative price spreads continue to reflect the underlying term structure.