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

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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… Click to show full 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: production; effects production; uncertainty; ethanol sugar; uncertainty effects

Journal Title: Energy Economics
Year Published: 2018

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