27Feb 2017

HEDGING EFFICIENCY OF FUTURES MARKET ON CASH CROPS (JUTE) - AN INDIAN EXPERIENCE.

  • Associate professor, P.G. Department of Commerce, Utkal University, Utkal University Campus, Vani Vihar, BBSR, Odisha.
  • Lecturer in Commerce. Upendranath Sarada Mohavidyalaya, K-Mugpal, Jajpur, Odisha.
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Commodities have played a major role in shaping the international economy by affecting the lives and livelihoods of people. Particularly, in India Shortage of critical commodities sparked huge public outcry and social unrest. Price volatility which arises from bad weather irregular production and harvests as well as from swings in demand and supply is one of the key problems associated with commodity. Volatility evokes not only yield risk but also price risk for both producers and consumers of the commodity. To manage these price volatility derivative products i.e. commodity futures are being used by farmers, consumers, firms, exporters, importers etc. to reduce the price risk. Commodity derivative market particularly, commodity futures is recognized as one of the important instrument that has been devised to achieve price risk management. In this context, an attempt has been made in the paper to evaluate the hedging effectiveness of commodity derivative market in the management of price risk with reference to the raw jute derivative market in India. The study utilized daily futures price and spot price data of Raw Jute provided by National Multi Commodity Exchange (NMCE) during the period 2010-14. Trend of spot and future prices in raw jute was analyzed by using descriptive statistical measures. To analyses the hedging effectiveness of the raw jute futures contract minimum variance hedge ratio has been used. Empirical evidence suggests variation in spot and futures prices of raw jute are higher however, an equal trend is found between the variations of spot and futures prices. The results of this study are useful for various stakeholders’ of agricultural commodity markets such as producers, traders, commission agents, commodity exchange participants, regulators and policy makers.

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[Anil Kumar Swain and Laxmidhar Samal. (2017); HEDGING EFFICIENCY OF FUTURES MARKET ON CASH CROPS (JUTE) - AN INDIAN EXPERIENCE. Int. J. of Adv. Res. 5 (Feb). 1725-1742] (ISSN 2320-5407). www.journalijar.com

Anil Kumar Swain, Laxmidhar Samal
P.G Dept. of Commerce,Utkal university, UNS Mohavidyalaya K- mugpal, jajpur

DOI:

Article DOI: 10.21474/IJAR01/3335      
DOI URL: https://dx.doi.org/10.21474/IJAR01/3335

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