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Price Discovery in Some Primary Commodity Markets in India

Author

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  • Raushan Kumar

    (Department of Economics, University of Delhi)

Abstract

With the onset of wide-ranging economic reforms in India in 1991, agents have been exposed to increased price risk in commodity markets. Futures markets are one important instrument for reducing price risk, and in this study we focus on the price discovery role of futures markets. Employing daily price data for nine crops for the period 2009-2014, we find strong causation running from futures to spot prices. Since spot prices impinge on the storage and cropping pattern decisions of farmers, our results imply that providing information on futures price to farmers on a daily basis would enable them to take more efficient decisions in the present.

Suggested Citation

  • Raushan Kumar, 2017. "Price Discovery in Some Primary Commodity Markets in India," Working papers 276, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:276
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    File URL: http://www.cdedse.org/pdf/work276.pdf
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    Cited by:

    1. Muneer Shaik & Abhiram Kartik Lanka & Gurmeet Singh, 2021. "Analysis of lead-lag relationship and volatility spillover: evidence from Indian agriculture commodity markets," International Journal of Bonds and Derivatives, Inderscience Enterprises Ltd, vol. 4(3), pages 258-279.
    2. Raushan Kumar, 2021. "Predicting Wheat Futures Prices in India," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 28(1), pages 121-140, March.

    More about this item

    Keywords

    Futures markets; spot markets; primary commodities;
    All these keywords.

    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing

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