Posts Tagged ‘commodities trading’

Commodity Weekly Commentary 2nd – 6th August

Bullion counter hammered down last week as prices fell like nine pins after investors wind up their long positions in gold and silver. Gold slid nearly $100.0 from the historic record highs, recorded June 21 at $1265.30 an ounce, affected by traders reducing their stakes and investments in the SPDR Gold Trust, the world’s largest exchange-trade fund.

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The absence of fundamentals from Europe, led traders to turn to the US for signs of global recovery, but the disappointment came from US durable goods report which slumped in the month of June by 1.0 percent, compared with a revised -0.8%. Base metal pack extended their previous week gains as global inventory draw down and gains in the euro boosted the metals despite a surprise decline in U.S. orders for long-lasting
goods.

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Western world unwrought aluminium stocks fell to 1.192 million tonnes in June from a revised 1.306 million tonnes in May, industry data showed. Moreover, gains in equity market also supported the prices as investors anticipate robust demand in near future. In energy counter crude oil prices wiped out its previous week gains and just fell from the level of $80 after the U.S Energy department reported a surge in inventories in the US. However, crude oil prices managed tom conquer some part of the lost territory mainly on the back of the softer US dollar index.

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However, natural gas futures ended higher last week, backed by firmer cash prices and a government report
showing another light weekly inventory build despite ongoing concerns about too much supply.

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As regards agro commodity, the week gone by majorly known for profit booking at higher levels in many commodities. Traders preferred profit booking in most of the spices as they became overbought in the market. Cardamom futures caught the attention of traders as they traded in lower circuits throughout the week, supported by weak spot market.

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After trading in positive territory for many weeks, finally jeera, turmeric and pepper saw pause in the rally as stockiest released some stocks at higher levels. Good monsoon and improved sowing in producing area dragged down guar counter in both spot and future market.

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What surprised the market was the upside move oil seeds. R M seed, refined soya oil and crude palm oil witnessed nonstop four week rally on confident move in CBOT amid fall in dollar index.

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Maize futures ignored the positive sentiments of CBOT and moved down on profit booking. Additionally, soyabean saw good short covering. Good export demand supported mentha futures to recover from its week low. Weak sentiments in spot market continuously hammered the potato futures.

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Area Sowing of Rabi Crops Crosses Last year Level

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Area sown under Rabi wheat picks up

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Area sown under Rabi wheat picks up

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Sowing of Rabi wheat, rice, coarse cereals and pulses has crossed last year’s level but there is a decline of about 6.2 per cent in the acreage of oilseeds.

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The shortfall in oilseed is mainly due to the decline in acreage of mustard in Rajasthan on account of poor weather conditions.

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A crop and weather watch group coordinated by the Ministry of Agriculture reviewed the situation on Friday.

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It was informed that as against a coverage of 88.85 lakh hectares in oilseeds last year, so far 83.33 lakh hectares had been sown this year.

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The shortfall was in mustard, groundnut, safflower, and Seamus sowing.


The area under pulses, however, increased to 125.60 lakh hectares this rabi, against 120.84 lakh hectares in the corresponding period last year.

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The highest area coverage was in Madhya Pradesh, followed by Uttar Pradesh and Karnataka.

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In the case of wheat, the area sown so far is 260.71 lakh hectares compared to 255.62 lakh hectares last year.

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Sowing in Uttar Pradesh was delayed owing to a late harvest of the kharif sugarcane crop.

The area under coarse cereals stood at 326.20 lakh hectares as against 324.04 lakh hectares in the corresponding period last year.

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Rabi rice was sown in 4.55 lakh hectares against 3.61 lakh hectares last year.

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In Other major Commodities Updates there is news of government allowing import of refined sugar at zero duty up to December 31 this year.

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Govt allows duty free sugar imports till Dec end

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The government allowed import of refined sugar at zero duty up to December 31 this year in the wake of sweetener prices nearing Rs 50 a kg in the retail market.

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The Cabinet Committee on Prices (CCP) also decided to permit UP mills to process imported raw sugar outside the state due to restrictions there.

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Import of white sugar was allowed till March 31 this year earlier.

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Cardamom exports may touch 1.5k tonne mark

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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Cardamom exports may touch 1.5k tonne mark

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Cardamom exports may touch 1.5k tonne mark

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With exports racing towards  a new high and the domestic demand  remaining strong, the average cardamom prices have surpassed the Rs. 1,000 per kg mark for the first time.

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The cardamom exports  for November 2009 stood at 275 tonne, taking the total exports in the april November period to 895 tonne compared with 370 tonnes  in the same period of the previous year.

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In 2008-09, the cardamom export was 750 tonne.

With another four months to go  the growers and traders feel the export could register a new record this year.  That is something in the range of 1,500 tonne.

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The harvest period is over and the growers are releasing  their stock to take advantage of the high price.

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The upcountry buyers  are continuing their  purchase fearing a scarcity of the spice  in February as the existing stock with the growers could be exhausted.

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The growers are expecting the prices to move further to 1200 per kg in the coming weeks with arrivals thining.

A lower production in the current year has also aided the rise in prices.

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In Other major Commodities Updates, we have info on the ATMA recommendations to the Govt to suspend the tradings of rubber futures.

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Suspend rubber futures – ATMA :

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Unusual volatility in natural rubber prices, despite peak production season and record imports, smacked of speculative  manipulation in the commodity.

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This view has been put forth by the association of automotive tyres manufacturers  association (ATMA).

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ATMA has therefore, called for a suspension of futures trading in rubber in the wake of the  unusual volatility in natural rubber prices.

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“As immediate and direct fallout of heavy speculative activity in natural rubber futures trading, the physical market for rubber is being unduly affected”.

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R Singhania, chairman of the ATMA has said so in a note sent to commerce and industry minister Anand Sharma and agriculture minister Sharad pawar.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Political will needed to contain pulse price rise

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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political will needed to contain pulse price rise

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Political will needed to contain pulse price rise –

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As part of measures to curb price rise, the planning commission has mooted the idea of encouraging formation of pulses grower’s federation which will trade on commodity future exchanges.

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The commission seems to believe such a trading plan will rein in price rise.

Stagnant acreage, low yields  and unsteady output have characterized pulse production for over two decades.

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On the other hand, demand for pulses has been rising steadily because of rising incomes and demographic pressure.

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In Other major Commodities Updates, we can read that palm oil climbed to the highest in more than seven months.

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Palm oil extends 2009 rally on crude oil rise –

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Palm oil climbed to the highest in more than seven months, extending the best annual gain in 12 years, as gains in crude oil prices increased its appeal as a substitute used in biofuels.

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Palm oil rallied 56 percent last year on rising demand from India and China, the top consumers, and amid tight supplies of soyabean oil because of drought in south America.

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Oil surged 78 percent in 2009, the biggest annual advance in a decade, and soyabean oil rose 21 percent.

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March delivery palm oil  gained as much as 1.2 percent to 2,696 ($788) a metric ton on the Malaysia derivatives exchange, highest since may 15 in intra day trading.

It traded at 2,690 ringgit at 5:13 local time.

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Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Industry expects 44% rise in sugar output next season

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Industry expects 44% rise in sugar output next season

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Industry expects 44% rise in sugar output next season:

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India’s sugar output is expected to rise by 44% to 23 million tonne in the crop year that starts from October 2010, an industry official said, as higher prices are likely to support cane cultivation.

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The output in 2010-11 would be substantially higher than an expected 16 million tonne during 2009-10, Vinay Kumar, managing director of the National Cooperative Federation of Sugar Factories Ltd, told.

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Bumper planting is going on in Uttar Pradesh because of higher prices.

Producers are raising price of cane every week, Kumar said.

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In Other major Commodities Updates we can read that Corn, Soybeans are expected to rise with the rise in crudeoil prices and decline in dollar value.

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Corn, Soybeans May Advance as Crude Oil Rises, Dollar Declines

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Corn, soybeans and wheat were little changed and may climb on speculation that the dollar’s decline and rising crude oil may increase demand for the crops used for food, animal feed and alternative fuel.

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Corn for March delivery fell 0.1 percent to $4.0425 a bushel in electronic trading on the Chicago Board of Trade at 10:51 a.m. in Tokyo after gaining 1.5 percent yesterday, the biggest gain since Dec. 11.

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Before today, the contract fell 3.1 percent this month, the first drop in four months. March-delivery soybeans climbed 0.3 percent to $10.12 a bushel.

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The contract rose 1.1 percent yesterday after the Department of Agriculture said U.S. exporters sold a total of 367,000 metric tons in transactions with Italy, China and buyers that weren’t identified.

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Cumulative U.S. sales from Sept. 1 to Dec. 10 are up 53 percent to 29.554 million tons.

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Seasonal Index – “Time is Money” Final Part

Hello Friends here we come up with an extension of our previous blog, “Seasonal Index……“Time is Money” Part 2

In previous Blog, we had touched upon the aspect like analysis part of seasonal patterns in predicting the future prices of the commodity.

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Seasonal Index - “Time is Money” Final Part

In this Blog, we would read about that how an annual average method can be used to generate a seasonal pattern in predicting the future prices of the commodity and seasonal pattern in the year 2009.

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Annual Average Method

The annual average method can be used to generate a seasonal pattern as well as predicting the future prices of the commodity.

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This seasonal price index is derived by calculating the annual average price, and then by expressing the price for each month during the year as a percent of the annual average.

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Here, the data which is used to derive the seasonal price patterns are the monthly prices taken between the year April’2004 & November’2009.

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The monthly indexes over the years are averaged to derive a price index that represents those years.

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An example of the technique is presented in Table 1.

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The seasonal price index table suggests that the index increases from the month of June, the time the buyers enter the market with full potential & reaches the highest till the end of the year.

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In The Year 2009

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The prices movement of this year almost followed the seasonal pattern, except few months.

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The supply constraints of lower output, as farmers opted for cotton, worked as a high base effect for the futures with a flat production figure of 8.5 lakh tonnes in 2008-09.

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The recovery in prices was noticed owing to the unforeseen failure of monsoons & comfortable stocks of 25-30 lakh bags from last year for which guar prices traded higher all through-out the year.

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This commodity created a history as it made a life time high, since the date of launch at national bourse, on reports that the output is estimated at 30-35 lakh quintals, down 62% due to factors like scanty rains in the major growing areas.

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Stronger Rupee along-with volatile Crude oil prices brought some corrections in export earnings from Guargum markets in Europe/US.

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However, upcoming demand for by-products such as churi & korma from international markets kept the millers interested in processing guar.

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In a nutshell, if investors want to spin their money safely & stabilize their net returns, using seasonal Index can prove to be a fair advantage.

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Futures Trading in Rice, Sugar and Pulses Should be Banned

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

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'Futures trading in rice, sugar and pulses should be banned'

‘Futures trading in rice, sugar and pulses should be banned’:

A parliamentary panel today suggested that futures trading should be banned in case of wheat, rice, sugar and some pulses till the country becomes self sufficient in these food items.


The Estimates Committee asked the government to bring a new legislation to control the retail prices of essential commodities like rice,wheat, pulses, edible oils, sugar, milk and vegetables.


On futures trading, the report said: “Since food security of the country is at the stake, the Committee recommends that futures trading in wheat, rice, tur dal, urad dal and sugar should be banned till the country achieves self-sufficiency in the production of these items on a continuous basis”.


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In Other major Commodities Updates we can see exports of Spice declining and on the other hand price of pulses rising up 80% in a year time.

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Spice exports decline 1.3% in April-October:

Exports of spices fell 1.3 per cent in volume and 1.6 per cent in value during the April-October period of the current financial year.


According to the latest estimates of Spices Board, total exports in the period were 280,885 tonnes valued at Rs 3,031.59 crore against 284,560 tonnes valued at 3,080.25 crore in the same period last year.


Pepper exports suffered a serious setback as the figures dropped to 11,500 tonnes valued at Rs 179.16 crore as against 14,750 tonnes valued at Rs 246. 70 crore in the same period last year.


Export of chilli also declined to 100,500 tonnes valued at Rs 706.50 crore as against 121,500 tonnes valued at Rs 660.17 crore.


Coriander exports had a better performance at 25,250 tonnes valued at Rs 128.12 crore against 17,100 tonnes valued at Rs 116.80 crore.

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Pulse prices rise up to 80 per cent in one year:

The government today said prices of pulses have surged by up to 80 per cent in the national capital over the last one year.


While prices of tur have gone up by 80 per cent in the last one year to Rs 90 a kg, that of moong dal surged 74 per cent to Rs 82, according to the data presented by Food and Agriculture Minister Sharad Pawar in a written reply to the Lok Sabha.


Even import of about 16 lakh tonnes of pulses between April and October has not eased pressure on the prices, the data showed.

Not just pulses, prices of sugar have almost doubled to Rs 38 a kg.

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Centre May Raise Coffee Package to Rs 802 Crores

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

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Centre may raise coffee package to Rs 802 cr

Centre may raise coffee package to Rs 802 cr

Centre may raise coffee package to Rs 802 cr:

The Centre is likely to increase the debt relief package for coffee growers to Rs 802 crore, 58 per cent more than the recommendations of Coffee Board, Union minister of law and justice, M Veerappa Moily said.

There are discussions at different stages to work out the package.

The figures of the total loan owed by the coffee industry to banks are Rs 1,700 crore.

The coffee board recommended a scheme for Rs 504 crore.

The coffee growers are in need of an urgent relief package, so as to give them a one-time life line to come out of the crisis.

The coffee industry is continuously facing low productivity due to drought of 2003 and 2004, which have had a domino effect on productivity.

In Other major Commodities Updates we can see how Corn, Soybeans advanced on the Speculation of excess rains which can delay the harvesting of crops”.

Corn, Soybeans Rally on Speculation Rains to Delay U.S. Harvest:

Corn and soyabeans advanced on the concern that higher-than-normal rainfall in parts of the U.S. may raise the risk of yield losses in the world’s biggest exporter of both crops.

Above average rainfall was forecast in producing states, including Iowa, Illinois, Nebraska and Indiana between Nov. 21 and Nov. 25, according to a U.S. Climate Prediction Center report dated Nov. 15.

The four states are among the biggest corn and soybean growing areas in the U.S. Corn for March delivery added as much as 0.9 percent to $4.0925 a bushel in after-hours electronic trading on the Chicago Board of Trade, and was at $4.09 as of 9:58 a.m. Singapore time.

Soybeans for January delivery climbed as much as 1.4 percent to $10.0125 a bushel in Chicago and last traded at $9.9475.

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Food Inflation at 13.7% !!

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the country.

Food inflation at 13.7%

Food inflation at 13.7%

Food inflation at 13.7%:

The food price inflation went up marginally to 13.7% for the week ended October 31 following an increase in vegetable prices, but the arrival of winter crop is expected to bring down the prices soon.

The built up inflation in the current year, or the increase in prices from the beginning of the current fiscal to end of October, has been strong at 14.4% against 7.67% in the corresponding period last year, data released on Wednesday showed.

This rise has been particularly steep in case of pulses (21.2%), vegetables (54.5%) and potatoes at (127.6%), clearly indicating that poorer segment of the population, who would spend a high proportion of their income on food, would have been hit hard by the increase in the prices.

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In Other major Commodities Updates we can see that wheat production in country is set to increase by 2 million Tonne in 2009-10.

Wheat Production to Increase by 2 Million Tonne in 2009-10:

Wheat acreage and production is expected to increase in 2009-10 rabi season.

A large area, which was not sown under rice due to poor monsoon this year, is expected to come under wheat according to scientists.

Area in central and southern belt will increase as unsown area will come under wheat.

Also, in the Indo-Gangetic plain of the Punjab plain, the Haryana plains, and the middle and lower ganga area will increase.

Rains in the month of September have ensured moisture availability for wheat.

However, the late harvesting of paddy (due to increase in temperature in the last week of October) has delayed sowing of wheat which is a big concern for the agriculture scientist and the farmers.

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Know the Basics of Commodity Trading :) Part 2

commodity-trade

Hello Friends,yesterday we discussed about the importance and need for Commodity Trading.

Now its time to understand and know that how can we do commodity trading, what is the process for that and how commodity trading works

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Here we go with first question of the topic for the day 🙂

How do you do commodity Trading?

When you buy a Gold Futures contract, you undertake to do three things.

1. Buy the amount of gold specified in the contract.

2. Buy it at the price specified in the contract.

3. Buy it on the expiry of the contract.

This could be after one month, two months, three months and so on.

Of course, if you sell the Gold Futures contract before it expires, then you don’t have to worry about actually buying the gold.

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Let’s say you buy the Gold Future contract at say Rs 15000 per 10 gm.

Your hunch comes true and the gold prices rally to Rs 16000 per 10 gm.

You can sell the Gold Futures any time before expiry of the contract.

Gold and other commodity futures prices are quoted on the commodity exchanges in exactly the same way in which stock prices or stock futures prices are quoted on a daily basis in the stock markets.

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Now let us see How Commodity Trading works?

They work just like stock futures :).

When you buy a Futures, you don’t have to pay the entire amount, just a fixed percentage of the cost.

This is known as the margin.

Let’s say you are buying a Gold Futures contract.
The minimum contract size for a gold future is 100 gms.
100 gms of gold may be worth Rs 72,000.

The margin for gold set by MCX is 3.5%.
So you only end up paying Rs 2,520.

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The low margin means that you can buy futures representing a large amount of gold by paying only a fraction of the price.

So you bought the Gold Futures contract when it was Rs 72,000 per 100 gms.

The next day, the price of gold rose to Rs 73,000 per 100 gms.

Rs 1,000 (Rs 73,000 Rs 72,000) will be credited to your account.

The following day, the price dips to Rs 72,500.

Rs 500 will get debited from your account (Rs 73,000 – Rs 72,500).

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Things You need to know about Commodities Trading 🙂

Compared to stocks, trading in commodities is much cheaper, because margins are much lower than in stock futures.

Brokerage is low for commodity futures.
It ranges from 0.05% to 0.12%.

Because of this, commodity futures are a speculator’s paradise.

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If you are a hard-core trader who follows the technical charts and do not really care what you trade, and if you are nimble and savvy, then commodity futures could be another asset class that you would be interested in.

The advantages in this line is that there are no balance sheets, no complicated financial statements.

All you need to do is follow the supply and demand position of the commodities you trade in very closely.

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Visit the commodities trading exchanges – NCDEX,NMCE and MCX – to find out which commodities are offered for trading, their contract size and other criterias.

You will have to get hold of a commodities broker but that should not be a problem.

There are lots of brokers that offer commodity trading these days.

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But, it would be wise to avoid commodity trading if you are a rookie or beginner.

A much better move would be always to initially trade in stock futures before opting for commodity futures.

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Just like stock futures (Read How to trade in Futures to understand how futures work).

When you buy a Futures, you don’t have to pay the entire amount, just a fixed percentage of the cost. This is known as the margin.

Let’s say you are buying a Gold Futures contract. The minimum contract size for a gold future is 100 gms. 100 gms of gold may be worth Rs 72,000.

The margin for gold set by MCX is 3.5%. So you only end up paying Rs 2,520.

The low margin means that you can buy futures representing a large amount of gold by paying only a fraction of the price.

So you bought the Gold Futures contract when it was Rs 72,000 per 100 gms.

The next day, the price of gold rose to Rs 73,000 per 100 gms.

Rs 1,000 (Rs 73,000 Rs 72,000) will be credited to your account.

The following day, the price dips to Rs 72,500.

Rs 500 will get debited from your account (Rs 73,000 – Rs 72,500).