The demise of the high fructose corn syrup futures contract: A case study

Thompson, Saråhelen; Garcia, Philip; Wildman, Lynne Dallafior

doi:10.1002/(sici)1096-9934(199609)16:6<697::aid-fut5>3.0.co;2-a

Cited by 30 publications

(24 citation statements)

References 7 publications

(3 reference statements)

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“…Cornell (1981) indicates the variability in the spot market prices to be the most significant factor. Thompson et al (1996) attribute the demise of the corn syrup future to a highly concentrated market and poor contract specifications, less homogenous product; small sized spot market and the inability of the contract to attract sufficient participants in the futures market. Williams et al (1998) make an interesting observation about the positive influence of futures trading on the China Zhengzhou commodity exchange on the spot market practices, like the adoption of better-quality standards.…”

Section: Literature Reviewmentioning

confidence: 99%

Determinants of Successful Agri - Futures Contracts in India

Agrawal

Sehgal²,

Agrawal³

2019

AJFA

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The study empirically examines the factors which impact the success of the Agri commodity futures contracts. Daily data from July 2012 to July 2017 is used for 22 commodities traded on the three national commodity derivatives exchanges and analyzed in a panel data analysis framework. The results of the study suggest that higher volatility in the spot and futures market, competition in terms of multiple exchange listing, the age of the futures contract, lot size and tick size increase the success potential of the agri futures contract. The international listing, the imposition of Commodity transaction tax, a higher number of levels in the value chain and greater geographical coverage in the spot market reduces the liquidity for the contract. Thus, the study identifies important market characteristics and elements of contract design that have implications for the success of agri commodities futures contract in India.

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Section: Literature Reviewmentioning

confidence: 99%

Determinants of Successful Agri - Futures Contracts in India

Agrawal

Sehgal²,

Agrawal³

2019

AJFA

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“…The literature lists many spot market features as being crucial to the success of a futures contract: the presence of a centralized cash market, liquidity of cash market, whether it is active (i.e., sufficient frequency of transactions), the size of cash market (whether it is large enough to attract potential participants in the futures market as hedgers and speculators), the volatility of spot prices, the availability of public information and the absence of market power (Brorsen and Fofana, 2001;Thompson, Garcia and Wildman, 1996). It is not easy to test for the impact of some of these factors because they could be endogenous to the presence or absence of a futures market.…”

Section: Literature and Empirical Strategymentioning

confidence: 99%

Underdeveloped Spot Markets and Futures Trading: The Soya Oil Exchange in India

Ramaswami

Singh

2007

SSRN Journal

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The limited presence of futures exchanges in developing countries where commodity markets fall short of the ideal underscore the importance of understanding the relation between spot and futures markets. The paper examines the exceptional success of the soya oil contract at the National Board of Trade (NBOT) in India. The paper asks whether the NBOT contract exhibits the fundamental features of mature futures markets in terms of its use by hedgers. If the market offers arbitrage opportunities to hedgers and if such activity is significant, then the activities of commercial firms should affect the returns to their hedging portfolio i.e., change in basis. This insight is developed into an examination of the impact of soya oil imports on the basis. Despite the lack of key market institutions such as certified warehouses and centralized spot prices, the NBOT contract compares well with mature exchanges. Soya oil imports exercise a significant impact on the basis and provide enough short-term volatility to make the contract attractive to both hedgers and speculators. 2 Underdeveloped Spot Markets and Futures Trading:The Soya Oil Exchange in India

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“…It has been well documented that contract design is critical to attracting liquidity (Working;Gray, 1960 and1978;Thompson et al, 1996). Particularly in the case of contracts for commodities of differing qualities than those already covered in existing contracts, the specification of quality must closely meet industry needs, represent quality that was previously ineffectively hedged with existing contracts, and represent sufficient volume to support futures trading (which might be quite small as previously discussed in an electronic trading environment).…”

Section: Importance Of Contract Design Spreading and Quality Certifimentioning

confidence: 99%

E-commerce and Agricultural Markets

Thompson

Kunda

2000

SSRN Journal

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E-commerce will have a profound effect on agricultural markets. Due to lower transactions costs, more firms throughout the agricultural value chain will be able to engage in business-to-business e -commerce. Products and services will be increasingly unbundled throughout the marketing channel. Firms will be able to specialize in narrow niches and will face competition from other similarly specialized firms. Many more products and services will be traded as "commodities," and price discovery throughout the value chain will become more transparent and observable. Differentiated or valueadded agricultural products, such as high oil corn, or "Roundup Ready" soybeans could be traded on organized, perhaps virtual, exchanges. To increase the probability of success of new contracts, exchanges should use information technologies, demutualize, design contracts to meet industry needs, encourage inter-and intra-market spreading, and develop new means to certify product quality. Producers will benefit from e -commerce if they can gain competitive access to the virtual value chain.

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The demise of the high fructose corn syrup futures contract: A case study

Cited by 30 publications

References 7 publications

Determinants of Successful Agri - Futures Contracts in India

Determinants of Successful Agri - Futures Contracts in India

Underdeveloped Spot Markets and Futures Trading: The Soya Oil Exchange in India

E-commerce and Agricultural Markets

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