IIMA - Course Catalogue
Agricultural Futures and Options Markets
Centre for Management in Agriculture
Prof. Vijay Paul Sharma
Course Description & Objectives
Risk management is a vital part of any business but becomes more important for farmers and agribusiness firms involved in marketing/trade of agricultural commodities. Although there are many sources of risk in agri-food business, price risk management is of particular relevance to producers and agribusiness managers. During the sixties and seventies, commodity price stabilization was attempted through State interventions such as State trading/marketing boards, minimum support price, subsidies, etc. Since the 1990s, a major shift in policy has taken place with more emphasis on liberalization and use of markets and market-based commodity risk management instruments. Several developing countries including India have introduced various derivative instruments such as futures, forward contracts, options, etc. to manage commodity price risk.
This course examines the history, characteristics and functions of commodity markets and provides an overview of the basic concepts needed to use commodity futures and options markets to manage price risk. It introduces the process of price risk management with emphasis on the mechanics and economic functions of commodity markets, fundamental and technical analysis of commodity futures prices, hedging strategies, and futures market regulations. The course discusses important tools available to farmers and agribusiness managers to manage price risk and develop skills to formulate risk management strategy. In addition, participants will be given an opportunity to utilize these tools by undertaking commodity-specific project, in-class exercises and homework assignments.
a. To familiarize participants with the history, organization and characteristics of commodity derivative markets and acquaint with use of fundamental and technical analysis for price discovery and understand importance of hedging and speculation as a management tool for producers and agribusiness firms
b. To develop participants' ability to analyse futures market trends, make trading decisions based on those trends and communicate effectiveness of commodity trading activities
c. To provide with skills to formulate and manage an appropriate price risk management strategy for an agricultural commodity and evaluate effectiveness of the price risk management strategy
d. To help participants develop a better understanding of factors affecting agricultural commodity prices by following and analysing price fluctuations in a particular commodity over the course of a term
To help participants develop a better understanding of factors affecting agricultural commodity prices by following and analysing price fluctuations in a particular commodity over the course of a term
© 2024 IIMA. All rights reserved