Market Integration and price volatility of cotton in Haryana
Loading...
Date
2018
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
CCSHAU
Abstract
The present study aimed to study the price movement of cotton i.e. growth, trend, seasonal variation, volatility and co-integration among the selected cotton markets in Haryana. The monthly data on prices and arrivals of cotton were collected for the period from 2005-06 to 2016-17. Moving average method was used to estimate seasonal indices. The advanced econometric tools like ADF test, Johansen co-integration test and Granger Causality test were used to study market integration. Coefficient of Variation measure was employed to assess price volatility. The results shown the considerable increase in cotton prices in the selected markets, whereas arrivals growth and trend found positive but non-significant in all markets except Uklana and Fatehabad markets having negative growth due to shift in cropping pattern. Seasonal analysis resulted that the cotton arrivals in the selected markets were higher in the months of October to January (Peak period) and lower in the months of February to May (Lean period). The inverse relationship was found between price and arrivals of cotton in the selected markets with few exceptions. The price series of all selected markets showed the consequences of unit root and were stationary at first difference. The long run equilibrium relationship among the selected markets indicated that these were integrated with each other. This implies that prices in domestic markets of Haryana move together in response to changes in the demand and supply and other economic variables. The intra year prices in selected cotton markets during the study period remained almost stable with less than 10 per cent of variation, whereas for overall period Coefficient of Variation ranged from 28.50 to 30.88 per cent in the selected cotton markets indicating presence of not much higher volatility in the study period. The increased volatility can be addressed through stock management and by employing risk management strategies like crop insurance, future markets etc.
Description
Keywords
null