The Impact of Trading Environments on Commodity Futures: Evidence from Biofuel Feedstocks’ Network

This study analyzes two types of networks constructed through correlation and Granger causality, consisting of eight commodity futures that can be used as biofuel feedstock. In the correlation network, futures in emerging markets are isolated from other futures, for example, crude palm oil (CPO) and sunflower futures, whereas those in mature markets are strongly correlated. In the Granger causality network, however, CPO and sunflower futures markets are influential in the network; CPO and sunflower futures provide and receive information with high degree centrality inside the network. In particular, CPO futures is an important bridge node connecting other markets with high betweenness centrality. Findings suggest that futures markets of biofuel feedstock commodities are significantly integrated, and the role of each market cannot be ignored regardless of the trading environment.