Commodity Future Trading and Cointegration of Turmeric Markets in India
R. Dhivya *
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, India.
M. Prahadeeswaran
Department of Agricultural Economics, Agricultural College and Research Institute, TNAU, Coimbatore – 641003, India.
R. Parimalaragan
Department of Agricultural Economics, Agricultural College and Research Institute, TNAU, Coimbatore – 641003, India.
C. Thangamani
Department of Vegetable Science, Horticulture College and Research Institute, TNAU, Coimbatore- 641003, India.
S. Kavitha
Department of Seed Science and Technology, Agricultural College and Research Institute, TNAU, Coimbatore – 641003, India.
*Author to whom correspondence should be addressed.
Abstract
The government has reduced its direct market intervention in order to promote private sector engagement based on market forces, Farmers in an agriculture-dominated economy like India suffer not only yield risk but also pricing risk. As a result, agricultural products are now more vulnerable to market risks related to pricing and other factors. The futures market has to decide the prices of a commodity on the basis of demand and supply. It is important to know about the bi-directional and unidirectional relationship between different market’s the prices and future and Spot markets in India, price discovery process and price forecasting in Indian agricultural commodities. Knowing about different market’s price Integration will help us to know the prevailing prices in various markets and also the impact of one market’s price on another. It will help the farmers to know the different pricing statuses in different markets. The study analyses the efficiency of commodity futures of turmeric traded in NCDEX for 2016-2022 and the cointegration of theNizamabad, Erode, Sangli and Cuddapah Markets of India. In agriculture, commodity futures and derivatives are essential to the process of managing price risk.
Keywords: Commodity futures, cointegration, spot price and future price, turmeric