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Abstract

In the past decade, Uruguay had its first experience with the live cattle futures market that operated during the last months of 1993 and early 1994. The fact that the market didn’t survive more than few months does not mean that futures markets cannot succeed the next time. The possible reasons that inhibited its development were examined in this paper. It is possible that all the necessary conditions for the success could not be given at this moment. If the low volume traded in the futures market was derived from structural conditions that are inherent to small economies, impossible to modify, or if there was a failure in creating the minimal conditions that could attract enough hedgers and speculators capable of support the market is something that has at least to be considered. Although the lack of available data prevents the statistical confirmation of any hypothesis, the evidence collected suggests that the observed low volume and lack of liquidity was mainly derived from the virtual inexistence of speculators, rather than from potential structural problems in the livestock market.

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