Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Wednesday, January 12, 2005

Mad Cows and Beef Futures

The Canadian gubmnt has just reported a third case of "mad cow disease" on an Alberta farm. This news comes just as the U.S. is considering the removal of most of its restrictions on importing Canadian beef.

The proposed lifting of the U.S. ban would ordinarily have been expected to raise the price of cattle in Canada and lower the price in the U.S. But with two cases of mad cow disease discovered in the past ten days in Canada, and with a suit by U.S. beef farmers arguing that reopening the border would harm the farmers and endanger consumers, what do you figure the odds are that the U.S. really will lift those restrictions?

Would you like to place a bet on whether the U.S. will open its borders, as planned, to Canadian beef by March 7th? You don't need Tradesports to do it -- you can take a position in cattle futures. Here was the immediate market reaction (from Reuters):
In Chicago, [U.S.] cattle futures rose sharply on the news of another case of mad cow disease in Canada and the possibility that the USDA would withdraw its beef trade rule. Live cattle contracts for February delivery closed up 1.025 cents at 90 cents per pound.

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