Posts Tagged ‘agricultural products’

THE CHANGING COLOURS OF COMMODITY EXCHANGES

Trading Hours is basically the hours of a day where trading of a futures contract can take place in an exchange. Again, this varies widely according to the asset being covered. Some commodities futures are traded only a couple of hours a day and some index futures are traded 24 hours a day non-stop.

.

With a number of exchanges around the world, trading takes place almost 24 hours a day, except on weekends. There are at least a dozen major exchanges that serve as a marketplace for commodities worldwide. Each of these specializes in certain commodities, while others trade in whole different set.

.

Additionally, as the side effect of being such a huge market, the market is extremely liquid and numerous transaction volumes takes place daily.

.

Instruments (contracts) traded on commodity exchanges include futures, options and other derivatives. Agricultural products, precious metals, industrial metals, and fossil fuels and other forms of energy are other products are among the primary goods that are traded in these exchanges.

.

A concept is emerging for trading in movie futures. Media Derivatives, a division of Veriana Networks, and Cantor are racing to set up the first US exchanges to offer futures on movie box office receipts. They are closing in on their goal of offering hedging — and speculation — instruments to investors and movie studios wary of audience fickleness and box office volatility.

.

The basic purpose of commodity futures markets is to allow suppliers/users of the product to sell/buy such contracts, whereby they can “lock in” a future price of the commodity and thereby eliminate the uncertainty and risk of doing business while facing an unknown future price. However, commodity trading has moved to electronic trading from open outcry systems, following the trend in financial securities trading. Electronic trading has been found to affect areas like bid-ask spreads, transaction costs and speed of information dissemination.

.

Commodity trading market is a lucrative field for investors. It generally refers to the future market, which empowers the traders investments, needs and can be gainful, expensive and enjoyable.

LIST OF LEADING COMMODITY INDICES

 

Commodity index is exactly what the name suggests as it represents the price movement of basket of commodities. The main concept behind composite commodities index is to cumulate economically appropriate materials into single and often tradable index.

LIST OF LEADING COMMODITY INDICES

Reuters/Jefferies CRB Index: The CRB index, which began trading on the New York Futures Exchange in 1986, is the oldest index and is designed to provide a more liquid and economically relevant benchmark that will provide a timely and accurate representation of commodities as an asset class.

Dow Jones-AIG Commodity Index: It started in 1999. The DJAIG is a quantity-based commodity index that predefines a set of criteria to prevent any sector from being dominant in the index. This index allows the investors to track commodity futures by offering a simple way of measurement.

Roger International Commodity Index: It is a kind of commodity index which gives the value of a collection of commodities from 10 exchanges that are used in the economic world. The number of commodities used for the collection is constant and that is 36.

Standard & Poor’s Goldman Sachs Commodity Index: The GSCI index was created in 1992 and is also exchange traded. The SPGSCI is a quantity-based world production-weighted index that currently holds six energy products, five industrial metals, eight agricultural products, three livestock products and two precious metals.

The index has the flexibility to hold any number of contracts as long as the particular contract meets the liquidity criteria. Contracts are weighted by the average worldwide production in the last five years of available data.

MCX COMDEX: It is India’s first composite commodity future Index. This index encompasses future contracts drawn on commodities included in broad categories – metals, energy and Agri, traded on MCX, thus representing diverse sector.