Role of Futures Trading in Facilitating Commodity Exports
In India, since its beginning in 1921 futures trading has been subjected to frequent intervention by the government in terms of allowing, banning and restricting its operation. As the debate on their utility for the economy as a whole, especially in terms of price stabilization, continues, the government is hesitant to encourage futures trading. The usefulness of futures markets are being reexamined in the light of its positive effects on international trade. Futures market seems to help exporters by way of reducing the risk of dishonor of contracts in the domestic market, reducing transaction cost due to liquidity and standardization, better market information and so on. However, unless the exporters are assured that in the long run they do not incur losses by participating in the futures market, they will not participate in the trading on price stabilization should not be negative. This study examined the issues of exporters’ profitability from trading in castor seed futures and price stabilization effect to assess whether futures trading should be encouraged for enhancing exports. The results indicate that the castor oil exporters would not have incurred losses if they had consistently participated in the futures market. In fact they would have benefited by following certain trading strategies. The price stabilization test results also indicated that price stabilization effect is stronger than the destabilization effect. This is more so during high price years. These results indicate that futures trading can be beneficially used for export promotion.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Phone: 91 79 2630 7241|
Fax: 91 79 2630 6896
Web page: http://www.iimahd.ernet.in/publications
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:iim:iimawp:wp01070. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.