Agri Cost Management and Profitability : Role of Futures Market in India during Covid-19 Pandemic

Abstract

Futures contracts play an important role in price discovery, in portfolio diversification and in hedging of risk arising out of adverse price movements. In this study, an attempt has been made to examine the viability of the futures market in India during the Covid period to facilitate the farmers and others associated with agriculture in their cost management and profitability analysis through hedging. It is found that a number of agricultural commodities have been discontinued by the MCX from futures trading. Out of the eight agricultural commodities continued during this time, only two are found to have been less effective whereas the remaining commodities were effective in providing hedging benefits. The study recommends that the spreading of awareness and education, relating to futures trading in agricultural commodities, may improve the scenario of risk-return analysis for the market participants.