Commodity Futures And Spot Volatility: A Literature Review

Krishna Singhal

Abstract


Commodities derivatives are instruments that have been devised to achieve price risk management by basing the value of a security on the value of an underlying commodity. Commodity derivatives which were traditionally developed for risk management purposes, are now growing in popularity as an investment tool. Unlike financial derivatives, commodity derivatives do not raise resources for firms to invest; rather allow producers (both agricultural and industrial) to get insurance for the future value of their outputs (or inputs). The present paper makes an attempt to review the existing literature on the Agricultural Commodity Derivative market with reference to the Impact of Commodity Futures Trading on spot price volatility. In this we have also tried to analyse the efficiency of the commodities futures market in India, whether it help to manage the price risk, discovering price and managing efficiency or not.


Keywords


Derivatives, Volatility, Futures

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References


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