ANALYSIS OF THE PROCESS OF FINANCIALIZATION IN THE BRAZILIAN LIVE CATTLE FUTURE MARKET

Viviane Araujo da Silva (), Marília Fernandes Maciel Gomes () and Leonardo de Mattos
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Viviane Araujo da Silva: Universidade Federal de Viçosa
Marília Fernandes Maciel Gomes: Universidade Federal de Viçosa

Revista de Economia Mackenzie (REM), 2013, vol. 11, issue 1, 10-27

Abstract: Among the agricultural commodities traded in the futures Market in Brazil, the contract for live cattle is what comes with higher growth in trading volume. In addition, there is a significant increase in the price of the commodity in the spot market. The growing volume of trading is explained by the fact that not only attract hedgers, but also other types of participants, called speculators. In light of the foregoing, this study aimed to evaluate the process of financialization of the Brazilian futures market cattle. To this end, we compared the hedge ratio given in the literature and hedge ratio practiced in the market. The results show that the ratio of hedge practiced in the market has overcome the optimal hedge ratio proposed in the literature from 2006, warning signs of possible existence of a process of financialization.

Keywords: Futures market; Optimal hedge ratio; Live cattle. (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:aft:journl:v:11:2:may:aug:2013:p:10-27

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