Use of Futures Markets for Exports by Less Developed Countries

Thompson, Saråhelen

doi:10.2307/1241359

Cited by 16 publications

(9 citation statements)

References 4 publications

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“…Furthermore, the benefits not only allow efficient resources allocation among producers in the production process (Gemech et al, 2011), but also they outweigh the costs for most producers (Mohan, 2007). However, just like the non-market measures, market-related instruments have a number of bottlenecks, such as market thinness in developing countries, hedging costs, creditworthiness, feasibility criteria, mistrust, ignorance, basis risk and exchange rate risk (Thompson, 1985;Sorenson et al, 1990;Reinhart and Wickham, 1994;Morgan et al, 1999;Pennings et al, 1999;Mohan, 2007). Therefore, recent initiatives by the World Bank and its partners prolong previous efforts to use market-based instruments for primary commodity producers because they are said to stabilise prices (McKinnon, 1967;Powers, 1970;Kawai, 1983;Netz, 1995).…”

Section: Figure 4 Conditional Variances In Arabica and Robusta Pricesmentioning

confidence: 99%

Market Reforms and Commodity Price Volatility: The Case of East African Coffee Market

Lukanima

Swaray

2013

World Economy

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The goal of this paper is to examine the impact of commodity market reforms on producer price volatility using evidence from the East African coffee market. The results, based on time‐varying volatility models and key summary statistics, show that coffee market reforms in the East African Community (EAC) are associated with changes in producer price volatility and volatility persistence at both country and regional levels. However, reforms were not the only cause of changes in price volatility. The study further shows that reforms had different effects on prices volatilities of Arabica and Robusta varieties of coffee grown in individual EAC countries. These findings have wider implication for commodity market reforms and producer price stabilisation policies in the EAC and coffee producing countries in sub‐Sahara Africa.

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Section: Figure 4 Conditional Variances In Arabica and Robusta Pricesmentioning

confidence: 99%

Market Reforms and Commodity Price Volatility: The Case of East African Coffee Market

Lukanima

Swaray

2013

World Economy

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“…They cannot offer any form of quantity risk management, a role only partially played by crop insurance, and thus they can only claim to cover income risk partially. Clearly, the primary benefit though is to allow for hedging and as Thompson (1985) shows, this can provide benefits in four ways by providing:…”

Section: Futures Markets and Their Roles In Ldcsmentioning

confidence: 99%

Commodity futures markets in LDCs: a review and prospects

Morgan¹

2001

prog dev studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractRecent moves by the World Bank to devise market-based approaches for dealing with commodity price risk provides a fresh impetus for research in the area of commodity futures markets as a policy option. Since the collapse of the International Commodity Agreements, there has been little progress in finding a solution to the perennial problem of price risk arising from price volatility. This paper aims to provide a background to the more general issue of development and growth in less developed countries (LDCs) by examining past and current policy attempts to reduce the effects of price volatility in primary commodity markets.

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“…This obstacle is compounded by the fact that traders in the developing country cannot use domestic currency to meet margin calls, and instead must-for instance-utilize dollars or interest-bearing U.S. Government securities. A further complication stems from risks associated with exchange rate fluctuations-when traders in a developing country hold U.S. futures contracts, they are, in effect, speculating on the value of their domestic currency relative to dollars (Thompson, 1985).…”

Section: Futures Markets and Developing Countriesmentioning

confidence: 99%

“…The trader may attempt to manage exchange rate risk by concurrently hedging in foreign exchange markets, 8 at the cost of requiring added liquidity on the part of the developing country trader (Thompson, 1985). The need to hold liquid financial reserves may exacerbate problems of foreign exchange scarcity.…”

Section: Futures Markets and Developing Countriesmentioning

confidence: 99%

Trade and Development When Exports Lack Diversification: A Case Study From Malawi

Persaud

Meade

2009

SSRN Journal

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The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and, where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or a part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should United States Department of Agriculture www.ers.usda.gov

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Use of Futures Markets for Exports by Less Developed Countries

Cited by 16 publications

References 4 publications

Market Reforms and Commodity Price Volatility: The Case of East African Coffee Market

Market Reforms and Commodity Price Volatility: The Case of East African Coffee Market

Commodity futures markets in LDCs: a review and prospects

Trade and Development When Exports Lack Diversification: A Case Study From Malawi

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