Dealing with Commodity Price Uncertainty

Varangis, Panos

doi:10.1596/1813-9450-1667

Cited by 26 publications

(27 citation statements)

References 2 publications

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“…Consequently, the approach favoured by international agencies is that of risk management for the individual, with one major policy approach being to encourage the use and establishment of futures and options markets. A view supported by Varangis and Larson (1996) and by Gilbert (1996) who states:…”

Section: Why Futures Markets Now?mentioning

confidence: 98%

“…Also, the impact of ICAs in achieving their goals was not as great as originally envisaged. Varangis and Larson (1996) suggest that the efficacy of the ICAs was "questionable" (p 1) and Gilbert (1996) shows that there is very little evidence pointing to success in reducing price volatility. However, it could be argued that the ICoA and the ITA were successful in that while they did not achieve price stability they did in fact manage to raise prices for 5 producers by employing export controls.…”

Section: Why Futures Markets Now?mentioning

confidence: 99%

“…In doing so, minimum prices for output can be guaranteed and thus risk is reduced for the individual trader for the cost of a small premium fee. Varangis and Larson (1996) show several examples of where this has occurred such as with cotton and oil in Mexico and oil in Algeria. Other examples can be found in Claessens and Duncan (1993) and World Bank (1999).…”

Section: Futures Markets and Their Roles In Ldcsmentioning

confidence: 99%

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Commodity futures markets in LDCs: a review and prospects

Morgan¹

2001

prog dev studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractRecent moves by the World Bank to devise market-based approaches for dealing with commodity price risk provides a fresh impetus for research in the area of commodity futures markets as a policy option. Since the collapse of the International Commodity Agreements, there has been little progress in finding a solution to the perennial problem of price risk arising from price volatility. This paper aims to provide a background to the more general issue of development and growth in less developed countries (LDCs) by examining past and current policy attempts to reduce the effects of price volatility in primary commodity markets.

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Section: Why Futures Markets Now?mentioning

confidence: 98%

Section: Why Futures Markets Now?mentioning

confidence: 99%

Section: Futures Markets and Their Roles In Ldcsmentioning

confidence: 99%

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Commodity futures markets in LDCs: a review and prospects

Morgan¹

2001

prog dev studies

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“…Since the commodity exchanges provide a forum for trading commodity-linked contracts, they reduce the transaction cost associated with finding a buyer or seller. Further, most importantly, the hedging and price discovery functions of future markets promote more efficient production planning, storage, marketing, rationalization of transaction costs and better margins for producers (Gilbert 1985;Varangis and Larson 1996;World Bank 1999). Since the inception of economic reforms in India in 1991, there have been efforts to open up futures trading in commodity markets which led to withdrawal of its prohibition in 2003.…”

Section: Introductionmentioning

confidence: 99%

Efficiency and Futures Trading-Price Nexus in Indian Commodity Futures Markets

Sahoo

Kumar

2009

Global Business Review

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Trading in commodity derivatives on exchange platforms is an instrument to achieve price discovery, better price risk management, besides helping macroeconomy with better resource allocation. Though the volume of commodity futures trade increased exponentially after the withdrawal of prohibition in 2003, the functioning of futures markets came under scrutiny during 2006–07 due to price rise and the government has proposed to impose transaction tax by 0.017 per cent on trading volume in the 2008–09 budget. In this context, we examine the efficiency and futures trading-price nexus for five top selected commodities namely gold, copper, petroleum crude, soya oil, and chana (chickpea) in commodity futures markets in India. Our results suggest that the commodity futures market is efficient for all five commodities. Further, we do not have sufficient evidence to support that futures market leads to higher inflation.

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“…(Central Bank of Sri Lanka, 2000a). The key advantages of market-based instruments over price stabilization schemes were providence of certainty of future revenues, comparatively low cost of implementation and shifting the risks to traders in industrialized countries who are willing to take the price risk (Varangis and Larson, 1996). The contact farming (CF) has been implemented widely in developing countries as means to reduce risks related to price and quality and as a way to reduce coordination costs within the food supply chain.…”

Section: Introductionmentioning

confidence: 99%