The Expansion of the Brazilian Winter Corn Crop and Its Impact on Price Transmission

Authors

Fabio L. Mattos, University of Nebraska-LincolnFollow
Rodrigo Lanna Franco da Silveira, State University of Campinas, BrazilFollow

ORCID IDs

Rodrigo Lanna Franco da Silveira

Document Type

Article

Date of this Version

2018

Citation

Int. J. Financial Stud. 2018, 6, 45

Comments

© 2018 by the authors.

Open access

doi:10.3390/ijfs6020045

Abstract

The purpose of this study is to analyze the impact of the growth of the Brazilian winter corn crop on the dynamics between domestic Brazilian prices and international prices as well as spot and futures prices in Brazil. Econometric time-series methods tests were applied using Brazilian spot and futures prices and U.S. futures prices. The statistical analysis found evidence that a long-run relationship between Brazilian and U.S. prices had developed, and the Brazilian futures market developed a more dominant role in the relationship between spot and futures prices domestically. These findings were particularly noticeable after 2002, when expanding corn production in Brazil was leading to greater participation in the international market (exports) and increasing trading in the Brazilian futures market.