Full Length Research Paper

The choice of feasible commodities for futures trading: A study of Iranian agricultural commodities

Seyed-Ali Hosseini-Yekani¹*, Mansour Zibaei¹ and David E. Allen²

¹Department of Agricultural Economics, Shiraz University, Iran.

²School of Accounting, Finance and Economics, Edith Cowan University, Australia.

*Corresponding author. E-mail: seyedalihosseiniyekani@ymail.com.

Accepted 18 February, 2009

   Abstract

In this paper an attempt is made to determine the most suitable agricultural commodities to be adopted for establishing a futures market in Iran. Two different approaches are adopted: the first involves identifying factors that contribute significantly to the success or failure of existing agricultural commodities futures contracts in established futures markets. The second involves simulating the hedging performance of potential commodities to determine the optimum contract choice. The results suggest that saffron, pistachios and rice are the three most feasible commodities to be adopted in order to establish commodity futures trading in Iran.

Key words: Agricultural futures contracts, commodity specifications, hedging performance, Iran.