Price Risk Management through NCDEX Futures: Evidence from the Indian Coriander Market

Abstract

Aim: This study explores the effectiveness of NCDEX futures contracts in reducing price risks for coriander crops (stakeholders). NCDEX (National Commodity and Derivatives Exchange) offers futures contracts to manage risks, hedging practices, and price discovery mechanisms. Study Design: Non-probability and purposive sampling techniques are used for the study area, sample size selection, and selection of stakeholders as they are selected based on language, time duration, some telephonic interviews, etc, and convenience sampling is used for the preparation of the questionnaire through Google form .Analysis the all phases using technical indicators like Candle stick chart, Bollinger bands, %B, ADX-Average Directional Index, Moving Average Exponential (EMA) and Relative Strength Index (RSI),MACD- Moving Average Convergence and Divergence, CCI-Commodity Channel Index, and Stochastic RSI provides more valuable insights for anticipating future trends. Econometric models like VAR (Vector Auto-Regression) was used especially in monthly prices of Coriander crop. Methodology: In this study, data was collected from primary and secondary sources such as farmers in major coriander cultivating areas, and NCDEX data respectively. The research is conducted incoriander-producing regions such as Rajasthan, Madhya Pradesh, Gujarat, Andhra Pradesh, and Assam. Hence, purposively the regions have been selected to know their perception towards coriander crop, some important information gathered for my research. The total sample size is 300. Findings and Results: Price volatility is a significant challenge for coriander farmers and traders due to seasonal production patterns, unpredictable weather, and fluctuations in demand. The study found key barriers, along with scarce resources like awareness, infrastructure, and less number of participants in cultivation. This research includes suggestions to improve the adoption of future contracts, focus on policy support, quality education, and enhanced market access. Over the last 10 years, Madhya Pradesh and Rajasthan have remained the top producers of coriander, with consistent growth in both area and production because of favorable conditions and better farming practices. India consistently contributes over 60% of the global coriander production, Turkey remains the 2nd largest producer. The ‘r’ value is 0.924428969, ‘p’ value is 0.00013, so there is a significant relation between Area’ (thousand hectares) and ‘Production’ (thousand metric tons). ‘t-value’ is 6.856, which indicates that the observed correlation is very far from expected under the null hypothesis. The F- value is 0.0000529183 so there is a significant impact of the Production in thousand metric tons and Productivity in kg/ha. The adjusted R-square value is 86.892; therefore, 87 % of this variance of the dependent variable is explained by the independent variable, it has a positive impact on output. So there is a linear relationship between Production in thousand metric tons and Productivity in kg/ha. Policy Recommendations: Strengthen farmer awareness & particiation in future markets, improve market infrastructure at spot market, enhance contract design and delivery mehanisams, strengthen price discovery & transparency, facilitate PPP (public-private –partnership) in commodity markets, and policy support for FPO- based collective hedging.