Financial Risk Management
Efficiency of Coriander Futures Market in India: A Study

Article Details
Pub. Date : Sep, 2019
Product Name : The IUP Journal of Financial Risk Management
Product Type : Article
Product Code : IJFRM41909
Author Name : Puja Sharma and Tanushree Sharma
Availability : YES
Subject/Domain : Finance Management
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No. of Pages : 12

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Abstract

Huge fluctuations have been observed in the prices of agricultural commodities including coriander in the recent years. Coriander is known as a traditional crop which occupies a significant position among the spices in national and international markets. In India, Andhra Pradesh, Karnataka, Madhya Pradesh and Odisha are the major producers of coriander. The recent changes in future trading of coriander contract have led to concerns among the regulators and stakeholders. Using data obtained from NCDEX for the period 2008-2016, the present study examines the performance of coriander futures market and its efficiency, using econometric techniques like Johansen’s cointegration test, vector error correction model, impulse response and variance decomposition. The study investigates both the long- and short-term mechanisms of prices between spot and futures market. In addition to it, Granger causality test is also applied to examine the casual relationship among the variables. The results of Granger causality indicate bidirectional causality between futures market and spot market. The impulse response graph reflects that the spot market has a larger response to stocks in the futures index than the futures’ response to spot market. The study gives support with regard to the concern for the traders, hedgers and regulators.


Description

Coriander or Coriandrum sativum belongs to the family Apiaceae. The future contract of coriander was launched in August 2008. The total production of coriander is around 3.35 lakh MT per year in the world. India is the leading producer and exporter of coriander. It contributes about 80% of the total production of coriander throughout the world. The global production of coriander is nearly about 2.9 lakh to 3.35 lakh per year. The other major producers of coriander are Canada, Morocco and Pakistan, while major importers are Indonesia, Sri Lanka and Singapore.


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