FEASIBILITY OF THE IMPLEMENTATION OF FUTURE CONTRACT FOR WHEAT IN BM&FBOVESPA

Abstract

This study evaluates the feasibility of implementing the wheat futures contract by the Brazilian commodities and futures exchange (BM&FBOVESPA). It use the Theory of Success and Failure of Futures Contracts as theoretical and methodological support for this research, which presents characteristics considered necessary for the viability of launching a new futures contract. This theory is subdivided into two complementary evaluations, which are called micro approach and macro approach. The first seeks to identify whether the wheat grain market in Brazil is appropriate to negotiate the commodity’s futures contract, while the second approach evaluates the profile of agents in the wheat supply chain, which are the potential users of this contract. In general, it is evident that the physical market for wheat meets a large portion of the attributes considered necessary for the establishment of a futures contract. Nonetheless, the small size of the physical market and strong government intervention weigh against the release of this contract, making the launch of the wheat futures contract in Brazil a precipitated movement.