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Price Discovery in Some Primary Commodity Markets in India

Author

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  • Raushan Kumar

    (Department of Economics, Delhi School of Economics)

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 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," Economics Bulletin, AccessEcon, vol. 37(3), pages 1817-1829.
    • Handle: RePEc:ebl:ecbull:eb-17-00592
    as

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    References listed on IDEAS

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    Cited by:

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    2. 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.

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    More about this item

    Keywords

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

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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