ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Do Speculators Play Spoilsport in Agricultural Commodity Markets?

Economic Benefits of Futures

This article examines the economic benefits of futures. Theoretically, futures are expected to aid price discovery and risk mitigation. But empirical analysis shows that speculators drive the markets and, by virtue of their domination, abduct the price discovery process in certain commodities. The deceptive price discovery leads to suboptimal forecast of future prices. So futures markets fail to offer an effective hedge against price risk. In addition, the current public-private partnership regulation is a deterrent to the sustainable growth of futures markets.

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