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Price Linkages in the Brazilian Sugarcane-Ethanol Industry in the Post-2008 Financial and Economic Crisis

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  • Chen, Bo
  • Saghaian, Sayed

Abstract

The Brazilian sugarcane-ethanol industry has undergone substantial changes after the 2008 financial and economic crisis. The industry has seen a large decrease in production and policy changes concerning gasoline, the main substitute for ethanol. In this context, price linkages of commodities in this industry, including Brazilian ethanol, gasoline, and sugar prices, international crude oil prices, and prices of U.S. ethanol are investigated. The results indicate Brazilian ethanol and sugar, oil, and U.S. ethanol prices form a longrun relationship. Moreover, Brazilian ethanol prices respond to price shocks in other commodity markets and adjust to correct the disequilibrium error induced by those shocks, maintaining the long-run relationship. Corresponding industry and policy implications are also discussed.

Suggested Citation

  • Chen, Bo & Saghaian, Sayed, 2015. "Price Linkages in the Brazilian Sugarcane-Ethanol Industry in the Post-2008 Financial and Economic Crisis," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 33(1).
    • Handle: RePEc:ags:jloagb:311374
    DOI: 10.22004/ag.econ.311374
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    Agribusiness;

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