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Uncertainty effects on production mix and on hedging decisions: The case of Brazilian ethanol and sugar

Sydnei Marssal de Oliveira, Celma de Oliveira Ribeiro and Maria Paula Vieira Cicogna

Energy Economics, 2018, vol. 70, issue C, 516-524

Abstract: The use of food crops to produce biofuels has been subject of interest in literature. The relationship between food and fuel prices can remarkably affect production strategies. These prices are subject to high uncertainty and producers must adopt hedging and storage strategies in order to avoid financial losses. This study investigates the effect of uncertainty on production, storage and hedging of ethanol and sugar in Brazilian mills.

Keywords: Uncertainty; Hedge strategy; Robust optimization; Production mix; Multi-product feedstock (search for similar items in EconPapers)
JEL-codes: Q41 C61 C6 Q47 G11 (search for similar items in EconPapers)
Date: 2018
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