Autopsy of a futures market failure: Japan’s Dojima rice futures in the early 21st century

IF 6.8 1区 经济学 Q1 AGRICULTURAL ECONOMICS & POLICY Food Policy Pub Date : 2024-09-01 DOI:10.1016/j.foodpol.2024.102717
Shuhei Yamamoto , Joseph P. Janzen , Teresa Serra
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Abstract

Futures markets promise improved price transparency and risk mitigation for staple commodities important to many developing countries, but they can fail even in developed economies with modern financial institutions. We investigate rice futures trading in Japan at the Osaka Dojima Exchange to identify the reasons underlying its failure in 2021. Our analysis reviews the multiple necessary conditions for a successful commodity futures market. We find the Japanese rice market did not meet many of these conditions. The spot market was fragmented with heterogeneous goods and a single dominant firm. Futures trading was unable to facilitate price discovery or effective hedging activity. To the extent it was traded, the Dojima rice futures contract was instead used as a forward contract for making and taking physical delivery. In addition, there was political opposition and regulatory uncertainty around futures trading. Using detailed data on trader positions in the futures market, we show how these factors contributed to diminished interest in futures trading from firms who handle physical commodities. The lessons from the Japanese case are useful for traders, exchanges, and policy makers, especially those in countries where futures markets may face similarly unfavorable economic and political conditions.

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期货市场失败的解剖:21 世纪初的日本堂岛大米期货
期货市场有望提高对许多发展中国家非常重要的大宗商品的价格透明度并降低风险,但即使在拥有现代金融机构的发达经济体,期货市场也可能失败。我们对日本大阪堂岛交易所的大米期货交易进行了调查,以找出其在 2021 年失败的原因。我们的分析回顾了成功的商品期货市场的多个必要条件。我们发现日本大米市场并不符合其中的许多条件。现货市场支离破碎,商品异质,企业一家独大。期货交易无法促进价格发现或有效的套期保值活动。就交易而言,堂岛大米期货合约被用作进行实物交割的远期合约。此外,围绕期货交易还存在政治反对和监管不确定性。利用期货市场交易者头寸的详细数据,我们展示了这些因素是如何导致处理实物商品的公司对期货交易兴趣减弱的。日本案例的经验教训对交易商、交易所和政策制定者都很有用,尤其是那些期货市场可能面临类似不利经济和政治条件的国家。
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来源期刊
Food Policy
Food Policy 管理科学-农业经济与政策
CiteScore
11.40
自引率
4.60%
发文量
128
审稿时长
62 days
期刊介绍: Food Policy is a multidisciplinary journal publishing original research and novel evidence on issues in the formulation, implementation, and evaluation of policies for the food sector in developing, transition, and advanced economies. Our main focus is on the economic and social aspect of food policy, and we prioritize empirical studies informing international food policy debates. Provided that articles make a clear and explicit contribution to food policy debates of international interest, we consider papers from any of the social sciences. Papers from other disciplines (e.g., law) will be considered only if they provide a key policy contribution, and are written in a style which is accessible to a social science readership.
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