Impact of E-NAM platform on market efficiency and price discovery for agricultural commodities

Abstract:

Electronic trading platforms for agricultural commodities have expanded rapidly across developing economies, yet their actual effect on price efficiency remains debated. This research assessed the impact of the Electronic National Agriculture Market (E-NAM) platform on inter-market price spreads and price discovery for five major commodities wheat, rice, maize, soybean, and cotton across 14 regulated markets in Egypt between 2017 and 2022. Monthly wholesale price data were collected from the Central Agency for Public Mobilisation and Statistics (CAPMAS) and from E-NAM transaction records. Market integration was tested using the Engle-Granger cointegration approach, while price discovery was assessed through Gonzalo-Granger and Hasbrouck information share measures. Results showed that inter-market price spreads declined by an average of 46.3% after E-NAM adoption. Cointegration was established in 11 of the 14 market pairs in the post-adoption period, compared to only 6 pairs before. The E-NAM reference price contributed between 52% and 68% of total price discovery across commodities. These findings suggest that digital trading platforms can meaningfully reduce price dispersion and strengthen the speed at which new market information gets incorporated into commodity prices.