Keywords
Futures Market
Derivatives
Commodity Exchange
How to Cite
Abstract
In derivative markets, futures are standardized agreements to purchase or sale of an asset or commodity at a fixed price at a future date. The first cotton futures market was established in Bombay in 1875. The price fixing and risk hedging of agricultural commodities are two important functions of agricultural commodity futures. In India, there are two main exchanges: the National Commodity and Derivatives Exchange (NCDEX) and the Multi-Commodity Exchange (MCX). Of the two, the National Commodity and Derivative Exchange is primarily focused on agricultural commodities. Technological growth has improved the agricultural sector, allowing for greater openness, transparency, and productivity. But the agricultural commodity market faces major government intervention as agriculture and its allied activities are directly related to food security for our 1.45 billion people, and to control food inflation, SEBI has banned a few agricultural commodities in the futures market, such as wheat, Mustard Seeds, Crude Palm oil, Soybean, Chana, and Moong. Due to all the regulatory body interventions, the agricultural commodity market has been more volatile. This study aims to provide an overview of the agricultural commodities futures market's development and performance during the previous 20 years.
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