CONDITIONS TO IMPLEMENT RICE FUTURES CONTRACT IN BRAZIL

Abstract

This article aims to evaluate the feasibility of setting up a rice futures market as an alternative to minimize the uncertainties associated with fluctuations in prices. To achieve this objective, the Theory of Success and Failure of Futures Contracts was used. Results showed that, initially, a term market should be well established so that the agents on this market could develop their knowledge and potentialities, allowing in the future the rice futures contract implementation in Brazil. Besides, government intervention must be reduced so that price formation could be free. Another problem is the increasing concentration in the industrial sector which could harm success chances of the future contract. Market integration analysis was also used to verify whether irrigated and dry rice markets are integrated. Results showed that markets are integrated and that the Rio Grande do Sul state is the rice price maker in Brazil.