Posts Tagged ‘commodity futures market’

News Round Up 2nd -6th August 2010

•India’s food ministry proposes to sell 2.74 million metric tonnes of food grain over the next six months from federal stocks in a bid to free-up warehouse space.

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•The government has allowed export of 3,00,000 tonnes of rice and wheat through diplomatic channels to Bangladesh and Nepal.

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•Soyabean Processors Association of India expects soybean production in the country at 85 lakh tonnes (lt), which is far below last year’s 95 lt.

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•Turmeric area in Andhra Pradesh stood at 0.53 lakh hectare against 0.41 lakh hectare, nearly 101 % of the normal area covered.

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•Water level in India’s main reservoirs was at 19 per cent of capacity on July 22, 2 per cent higher than the previous week’s level, government data showed.

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•Wholesale Price Index For food articles 9.67% on week ending 17 July against 12.47% previous week.

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•Commodity futures market regulator FMC may consider the creation of an appellate tribunal akin to that in stock markets for the resolution of disputes between clients and brokers.

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•Supply from the OPEC (except Iraq) has averaged 26.95 million barrels per day (bpd) this month, up from 26.75 million bpd in June, according to the survey of oil firms, OPEC officials and analysts.

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Why Commodities Trading? Know Now.. Part 1

Why Commodities Trading? Know Now

.

Are you comfortable enough to answer these given questions with certain level of confidence and conviction?

🙂

For example,

What do you think gold prices will go up further?

Are you sure that crude oil prices are going to fall?

Have you heard that the soya crop this year is bad and will result in soya prices going up?


If you think that your answers and predictions have a good chance of coming true and are willing to bet some money on them, you could try your hand at playing the commodity futures market.

You might have heard about stock future trading quite often.

Lets discuss about commodity futures, now..

🙂


The commodity markets have changed a lot from the poky, little hole-in-the-wall trading offices in narrow streets next to crowded markets where traditional dhoti-clad merchants used to trade.


Now India’s boast of 3 major national level commodity exchanges which are :

.

National Commodity and Derivative Exchange(NCDEX),

Multi Commodity Exchange (MCX) and

National Multi Commodity Exchange of India(NMCE).

.

These brand commodities exchanges have been set up and these are fully computerized.


More and more stock brokers are setting up commodity brokerages as well, and trading volumes in commodity futures is widely predicted to rival the volume of derivative transactions (futures and options) on the stock exchanges.


What’s more, you can also trade online.

🙂


Well  first lets talk on the need and importance of commodities trading.


Why commodities trading?


Well, let’s suppose you want to buy gold because you believe that the price of gold will rise.

You could then buy gold ingots, store them, wait for them to go up in price, and then sell them at a profit.


But, you have to be sure that the gold you buy is pure, you have to find a place to store it, you have to provide the security, transport it to vault and other such hassles.


Therefore,a far better way to invest in gold would be to buy gold futures from the commodities exchange. This is much advisable step.

🙂


Next Blog we would touch upon issues like how can we do commodity trading, what is the process and how it works. 🙂

Stay Tuned for more and more on this 🙂


However For More latest Industry,Stock Market and Economy News Updates, Click Here

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

🙂

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.

🙂

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.

🙂

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.

🙂

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).

🙂

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.

🙂

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.

🙂

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.

🙂

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.

🙂

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).

Know the Basics of Commodity Trading :) Part 1

commodity-trading-futures

Are you comfortable enough to answer these given questions with certain level of confidence and conviction?

🙂

For example,

What do you think gold prices will go up further?

Are you sure that crude oil prices are going to fall?

Have you heard that the soya crop this year is bad and will result in soya prices going up?

🙂

If you think that your answers and predictions have a good chance of coming true and are willing to bet some money on them, you could try your hand at playing the commodity futures market.

🙂

You might have heard about stock future trading quite often.  Lets discuss about commodity futures, now..

🙂

The commodity markets have changed a lot from the poky, little hole-in-the-wall trading offices in narrow streets next to crowded markets where traditional dhoti-clad merchants used to trade.

🙂

Now India’s boast of 3 major national level commodity exchanges

which are National Commodity and Derivative Exchange(NCDEX),

Multi Commodity Exchange (MCX) and National Multi

Commodity Exchange of India(NMCE).

These brand commodities exchanges have been set up and these are fully computerised.

🙂

More and more stock brokers are setting up commodity brokerages as well, and trading volumes in commodity futures is widely predicted to rival the volume of derivative transactions (futures and options) on the stock exchanges.

🙂

What’s more, you can also trade online.

Well  first lets talk on the need and importance of commodities trading.

🙂

Why commodities trading?

Well, let’s suppose you want to buy gold because you believe that the price of gold will rise.

You could then buy gold ingots, store them, wait for them to go up in price, and then sell them at a profit.

But, you have to be sure that the gold you buy is pure, you have to find a place to store it, you have to provide the security, transport it to vault and other such hassles.

🙂

A far better way to invest in gold would be to buy gold futures from the commodities exchange.

Next Blog we would touch upon issues like how can we do commodity trading, what is the process and how it works

🙂

Stay Tuned for more and more on this 🙂

However For More latest Industry,Stock Market and Economy News Updates, Click Here