Spot and future price relationship of black gram and green gram

Abstract:

The present study was undertaken to examine the relationship between spot and future prices and to study the seasonal and cyclical variations in prices of black gram and green gram in selected markets of Maharashtra. Latur and Amravati markets were selected for black gram, whereas Akola and Washim markets were selected for green gram. The study was based on monthly secondary price data for the period 2005-2025. Spot prices were collected from AGMARKNET, while future prices were obtained from NCDEX. The data were analysed using EViews 12. Correlation and regression analyses were employed to examine the relationship between spot and one-month lag future prices, while seasonal indices were estimated using the twelve-month ratio to moving average method and cyclical movements were studied using the residual method. The results showed a positive and significant association between spot and lagged future prices. For black gram, the correlation coefficient between Latur spot and lagged future prices was 0.89, while it was 0.59 for Amravati. For green gram, the corresponding values were 0.93 for Akola and 0.91 for Washim. Regression analysis also showed a positive and significant influence of one-month lagged future prices on spot prices. The regression coefficients were 0.82 and 0.54 for Latur and Amravati, respectively, and 0.79 and 0.76 for Akola and Washim. Seasonal variations were observed in both commodities, with relatively higher indices during September-November for black gram and April-May for green gram. Cyclical fluctuations were also evident with higher movements during 2014-2016 and 2023-2024. The findings indicate that futures prices provide useful signals for spot market movements and futures market has an important role in price discovery.