The white shrimp futures market: Lessons in contract design and marketing

Sanders, Dwight R.; Manfredo, Mark R.

doi:10.1002/agr.10035

Cited by 23 publications

(21 citation statements)

References 18 publications

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“… Cash market prices fluctuate and/or are uncertain (Maliaris 2000; Sanders and Manfredo, 2002;Telser, 1981).…”

Section: Specific Characteristics Of Commoditiesmentioning

confidence: 99%

Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets

Fizaine¹

2018

Resources Policy

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In this paper, we aim at identifying root causes linked to presence or absence of futures contracts for raw materials. Unlike previous analyses focused on the success of futures contracts via exchange volume and open interest, we offer an alternative logit model applied to the presence or absence of futures contracts for 53 metal markets. We use different factors (price and physical quantities produced, geographical concentration…) and several combinations of variables in order to explore the root causes of futures contracts. The model shows both great explaining capability and a good prediction power which are robust to data resampling. According to the model, it is unlikely that minor metals successfully introduce futures contracts in the coming years. We also discuss the use and interest of this model by institutions and financial authorities devoted to the development of futures contracts for raw material markets.

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“… Cash market prices fluctuate and/or are uncertain (Maliaris 2000; Sanders and Manfredo, 2002;Telser, 1981).…”

Section: Specific Characteristics Of Commoditiesmentioning

confidence: 99%

Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets

Fizaine¹

2018

Resources Policy

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“…() argue that the activeness of a commodity's cash market (and the price information revealed through active cash markets) is a necessary condition for a successful futures market. Research into the failures of the stocker cattle futures contract (Perversi et al., ) and the white shrimp contract (Sanders and Manfredo, ) shows that low basis volatility and market participants’ general knowledge of futures markets are also important. Evaluations of potential salmon (Bergfjord, ) and Brazilian milk (Siqueira et al., ) futures contracts concluded that product homogeneity, high price risk, and the absence of competing risk‐management tools were among the factors contributing to the viability of futures markets.…”

Section: Determinants Of Futures Contract Success As Identified By Thmentioning

confidence: 99%

“…Studies have also suggested that the types of futures market participants can impact a contract's trade volume. For example, Sanders and Manfredo () and Bollman et al. () hypothesize that the failures of the white shrimp and diammonium phosphate futures contracts, respectively, were related to the markets’ inability to attract speculative trade.…”

Section: Empirical Model For Evaluating Futures Contract Successmentioning

confidence: 99%

Revisiting the determinants of futures contracts success: the role of market participants

Bekkerman

Tejeda

2016

Agricultural Economics

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The Chicago Mercantile Exchange introduced a futures contract for distillers' dried grains (DDGs) in early 2010, but the market became inactive only four months after its inception. While many new futures contracts do not develop into high-volume traders, interest from DDG cash market participants indicated that this contract could be successful. Prompted by the unexpected lack of trading activity in this new futures market, we empirically revisit the question of what factors contribute to a futures contract's success and extend the literature by investigating the roles of market participants and the significance of supporting futures markets. Estimation results indicate that the market participant type-hedger or speculator-affects futures contract trade volume. More importantly, we find that the viability of new futures contracts for commodities that are jointly produced with other commodities is impacted by hedgers' trade volume of the related futures contract. These results provide important additions into the portfolio of indicators used by commodity exchanges to more cost-effectively evaluate new futures contract products.JEL classifications: G13, Q13, Q14

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“…The plywood futures resulted in the establishment of a Research and Development department in the exchange. Sanders and Manfredo (2002) examined the performance of the Minneapolis Grain Exchange's white shrimp futures contract, one of the first futures contracts aimed at the aquaculture industry. Although the market structure largely conformed to the traditional criteria for a successful futures market, the contract's performance was disappointing in terms of liquidity, basis behavior and hedging effectiveness.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of the Economic Potential for a Mercosur Rice Futures Market

Souza¹,

Filho²,

Zancan³

et al. 2015

SCG

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World rice production reached 488.4 thousand tons, in 2012. Asian countries are the world’s largest rice producers, followed by Latinamerica, particularly Brazil, where rice is a basic food item. In spite of the clear economic benefits bestowed by commodity futures markets, neither Asia nor Mercosur have implemented a regional rice futures market. In sum, we propose to investigate the feasibility of a Brazilian rice futures contract to serve the Mercosur region by estimating Mercosur rice price dynamics and analyze basis risk and hedging effectiveness for rice market agents in the region, in a simulation framework using a hypothetical regional contract price. Sample data and period was non-probabilistic, for accessibility and convenience. Mercosur rice price dynamics expressed Argentina and Uruguay rice prices moving in synchrony. Brazil rice prices were on lower levels. Also, all three pairs of rice price series are cointegrated, with one cointegrating equation. Again, results can be largely attributed to the different price data used, in Brazil was rough rice, while in Uruguay and Argentina milled white rice with 5%. Despite that, there are preliminary evidences that a Mercosur rice futures market could be feasible.

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The white shrimp futures market: Lessons in contract design and marketing

Cited by 23 publications

References 18 publications

Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets

Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets

Revisiting the determinants of futures contracts success: the role of market participants

Analysis of the Economic Potential for a Mercosur Rice Futures Market

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