Price Determination for Exchange Traded Commodity and Forecasting Prices

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Background In any society which has to make arrangements for a continuous supply of commodities, trading activity cannot be confined to the immediate present needs. Forward contracts evolved in the early stages of development of mercantile activity to cater to the needs of a manufacturer, processor or producer to ensure that he gets his supplies of raw material at the appropriate time. Such forward contracts provide for giving and taking actual delivery of goods at a specified price and a specified future date. The futures or hedge contracts were evolved at a later stage to enable the various functionaries engaged in merchandising a commodity, or its processed products, to protect themselves against the risk of unpredictable price fluctuations over time in the commodity or its products. In the study it is proposed to study the price determination for exchange traded commodity and forecasting its future prices based on the different mathematical tools available. Introduction: Statement of the problem In India, soybean or soya bean is a Kharif crop. India ranking is 5th largest producer of soybean in the world. The country Production is approximately 9.67 million tons of soybeans in 2009/10 in India and in 2012/13 the soybean produced 11.34 million tonnes. The states of Rajasthan, MP and Maharashtra contributed 95% of the total soybean produced in India. The United States., Brazil, Argentina, India and China are the world's largest soybean producers and they

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