Authors:
V .Chandra Sekhar Rao ,ArcotPurna Prasad ,G.Vijaya Kumar,DOI NO:
https://doi.org/10.26782/jmcms.2020.08.00063Keywords:
Commodity Futures,Price Discovery,Risk Management ,Price information Dissemination,Abstract
Commodity derivatives are risk management tools and are contracts built on commodities which will have transaction on the same day and settlement in the future. Futures are one among the derivative products which does the role of hedging and helps in price discovery of the underlying commodity. If the futures price of a commodity has to converge to the spot price in order to discover the price, information that affects the demand and supply factors leading to convergence need to be focused. Past research posted the establishment of organized futures exchanges, their role in price discovery with respect to some commodities as well as commodity indices. But the evidences are neither comprehensive nor conclusive in any manner. Empirical research on the subject over the last decade showed that the introduction of derivatives contracts improved the liquidity and reduced informational asymmetries in the market to some extent. Researchers attempted to find the impact of price information dissemination on price discovery and hence the benefits to market participants, both producers and consumers. In this study authors attempted to evaluate the problem of information dissemination across market players in Karnataka, Andhra Pradesh and Telangana states with special reference to maize. Maize the ‘queen of cereals’, is the hope of India as a substitute to rice and wheat, to mitigate the shortage of million tonnes of food material that Indians will be facing very soon. It is known that maize futures which were given by both NCDEX and MCX platforms were serving the roles and in the recent times no new contracts were announced. This research tries to check whether the Information Dissemination Project implemented by Central Government of India, with help of commodity derivative exchanges was successful in disseminating the right information, at right time with right approach/tools, whether the stake holders got benefitted with information and maize futures and finally it tries to study whether the maize futures have helped in price discovery? The study is done with the help of primary data collected through questionnaires and secondary data collected through NCDEX and other spot markets. Statistical Package for the Social Sciences (SPSS) and E-Views are used to test the hypotheses framed hence, to prove the role of maize futures as a risk management and price discovery tool. Authors came out with the conclusion that maize futures do the role and future contracts can be rolled on for benefit of all the stakeholdersRefference:
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