Price Instability: A Study of Futures’ Markets for Pepper in India Sam Anu Susana, Singh N. P.b, Srivastava S. K.c aMahatma Gandhi University, Kottayam, Kerala bNational Institute of Abiotic Stress Management, Baramati, Maharashtra cDirectorate of Water Management, Bhubaneswar, Odisha Online published on 9 October, 2012. Abstract Price variability is a component of market risk for both producers and consumers. Among the various measures adopted to cope up with this problem, market-based risk management tools, especially futures trading, have assumed special significance in the liberalization era. Such markets have been set up for stabilizing prices and providing fair and competitive means for trading. The present study has deciphered the price behaviour of pepper during pre-futures period and post-futures period by taking monthly (1990–2011) as well as weekly (1996–2012) prices. The pepper has shown high instability in monthly prices and a decline in the compound growth rate during the period 1990–2011. During pre-futures period, the instability index was high and the growth rate was negative, while during post-futures period, the instability in prices has been found low and the compound growth rate has been found positive. The average price of pepper was found to be high in the spot markets. The instability in both spot and futures prices has been found almost same in the pepper. The spot and futures prices have shown a converging trend in pepper. Top Keywords Price instability, futures market, pepper. Top |