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ivestock futures markets are a marketing tool available to participants in L livestock and meat production, processing, and merchandising. There has been controversy, however, regarding the usefulness of the live cattle futures market for producers. Questions have arisen about the impact of futures markets on cash market price behavior, the accuracy of the futures market as a predictor of future prices, and the usefulness of this futures market to livestock producers, both large and small. This study will focus on the profit opportunities available to livestock producers through futures markets, and the risk premiums implicitly paid by hedgers.As J. M. Keynes suggested, it does seem likely that futures markets used extensively for short hedging might have some downward bias. In a risk-averse world, the difference between the futures price today and the futures price at the expiration of that contract represents the risk premium paid by those reducing their risk (i.e., hedgers) to those willing to accept that risk. Theoretically, one might expect that Marvin L.

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