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Prefeasibility Study of an ASEAN Rice Futures Market

Published by:
Online Location
https://www.adb.org/publications/prefeasibility-study-asean-rice-futures-market
Publication date
27/03/2012
Number of Pages
50
Language:
English
Type of Publication:
Studies
Focus Region:
Asia and the Pacific
Focus Topic:
Agricultural Value Chains / Agri-Businesses
Type of Risk:
Managerial & operational
Type of Risk Managment Option:
Risk coping
Risk assessment
Commodity:
Crops
Author
Andrew McKenzie
Organization
Asian Development Bank (ADB)

In this paper, Andrew McKenzie looks into the economic benefits and limitations of rice futures market in stabilizing prices across multiple years or seasons. He identifies several important cash market characteristics needed to promote the success of a futures contract, namely, adequate cash price volatility, a large competitive and well-defined underlying cash market that lends itself to standardization, minimal government intervention in the underlying cash market, and free flow of public information. The paper concludes that the current cash market characteristics in the ASEAN region are not conducive to the development of a successful rice futures contract at either domestic or regional level.