Price Risk Management Strategies and Commodity Futures Market in India Jena Pratap Kumar, Goyari Phanindra Department of Economics, University of Hyderabad, Hyderabad-500 046, Andhra Pradesh Online published on 9 October, 2012. Abstract Price risk is one of the important concerns for producers as well as consumers. There have been several debates on the issue of price risk management among the commodity-exporting and commodity-importing nations. At the international level, different stabilization agreements are in place to monitor prices of agricultural commodities. The main aim of international agreements on commodity price stabilization has been to stabilize commodity prices through buffer stocks and export quota. But such agreements have failed, on many occasions, due to lack of discipline and cooperation between nations. Later, market based-mechanisms were also adopted to stabilize price variations in many nations. Both price stabilization schemes and market-based mechanisms have relative merits and demerits. The present study has examined the salient features of various price policies introduced over the years (such as international commodity price agreements, price stabilization schemes and market based mechanism) to monitor the price risks, and also the effectiveness of market based-mechanisms (compared to price stabilization schemes), particularly, for commodity futures market for selected commodities in India. An efficient spot and forward market, grading, insurance, warehouse facilities and government support are highly essential for the overall development and for better commodity price risk management in a country like India. Top Keywords Price risk, price stabilization scheme, market-based mechanism, futures market risk management. Top |