Posts Tagged ‘futures trading’

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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Wheat Falls as Rally, Dollar Gain May Curb Demand for U.S. Crop

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

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Wheat Falls

Wheat Falls as Rally, Dollar Gain May Curb Demand for U.S. Crop:

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Wheat dropped on speculation that a price rally to a three-week high and the dollar’s rebound may reduce demand for the U.S. crop.

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Corn and soybeans also declined.

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The grain yesterday jumped 5 percent, the most since Nov. 11, leading gains in corn and soybeans on speculation that fund managers will purchase agricultural commodities at the start of 2010, anticipating improved demand as the global economy strengthens.

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Wheat for March delivery declined as much as 1 percent to $5.45 a bushel on the Chicago Board of Trade and traded at $5.4575 as of 10:49 a.m. in Tokyo.

The contract yesterday touched $5.51, the highest level since Dec. 8.

The grain has lost 11 percent this year.

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In Other major Commodities Updates, we have news of edible oil industry, urging a tightening of futures trading in oils and oilseeds.

Industry wants tighter oil, oilseeds futures norms:

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With oilseed crushers feeling the pinch on their margin due to rise in oilseed prices, which, they feel, have been fuelled by speculations in futures trading, the edible oil industry is urging a tightening of futures trading in oils and oilseeds.

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Raising the issue, the Solvent Extractors’ Association of India (SEA) has suggested the Union consumer affairs ministry that new futures contracts for oilseeds should be restricted to current plus one month only.

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As for existing futures contracts for the next six months, the traders should be asked to square them off on the date of settlement next month.

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Moreover, all contracts have to be backed by a minimum quantity of delivery, suggested SEA.

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It has further requested the ministry to enhance the margin on trading to such a level, which would discourage speculators entering into this arena.

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SEA Demands More Curbs on Oilseed Futures

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

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SEA demands more curbs on oilseed futures


SEA demands more curbs on oilseed futures:


The Solvent Extractors’ Association (SEA) has asked the government to raise margins and impose more curbs to prevent the misuse of futures trading in oilseed contracts.

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In a pre-budget memorandum to the finance ministry and the consumer affairs secretary (who regulates futures trade),

SEA asked, “the margin money required for oilseeds futures be enhanced to a level that will discourage pure speculative activity.”

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To curb this, oil seeds contracts should be restricted to one month, against six-monthly contracts currently, he said.

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“Existing futures contracts for the next six months should be squared off on the date of settlement of next month contract,” Sethia added.

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SEA has also said a percentage of the total traded volume by any trader be compulsorily settled by delivery so that it corresponds to prices in the physical market.

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These elements were using futures trade to build big positions and manipulate prices even at the time of harvesting, the official said.

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In Other major Commodities Update, there is news of 75 per cent of the local crushing capacity being remain unutilised even after two months of the beginning of the season.

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Three-fourth veg oil crushing capacity unutilized

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At a time when vegetable oil companies are worried over the growing dependence on imports due to stagnant domestic output,

about 75 per cent of the local crushing capacity remains unutilised even after two months of the beginning of the season.

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Generally, the Indian vegetable oil industry consisting of oil mills, solvent extraction units, vegetable oil refineries and vanaspati units commence the season during early to mid October.

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During this time, harvesting of soybean and arrivals in the mandi increase.

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Small to medium farmers commonly sell their produce to local traders (arhatiyas) who bring the seeds to mandis.

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But, big farmers are holding back their produce in anticipation of higher prices.

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Therefore, mandi arrivals in totality have declined by over 25 per cent so far this season from the normal 2.5-3 million bags during previous seasons.

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Also, crushers are not willing to take up their business due to price disparity.

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Food Inflation at 17.5%, Households Pay Price

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

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Food inflation at 17.5%, households pay price

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Food inflation at 17.5%, households pay price:

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The government on Thursday said that the average wholesale price of food items had increased by a whopping 17.5% in the past one year.

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The figure was 15.6% a week ago.

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RBI to shift to a tighter money policy,which in turn would lead to a rise in interest rates.

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The Centre has blamed this year’s poor monsoon for high food prices.

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It also put the onus on state governments to control prices through better management of food supply through ration shops.

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In Other major Commodities Updates, we bring you the news of Govt opting for transgenic tech to boost pulses production and Natural rubber prices going double in a year.

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Govt looks to transgenic tech to boost pulses production:

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The Union government is drawing up a comprehensive programme to introduce transgenic technology to improve the productivity of pulses.

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Bt refers to a gene sourced from a soil bacterium that is transferred to plants and acts as an insecticide.

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The Bt gene activates a toxin that kills a class of pests largely responsible for damaging plants and, thus, denting yields.

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They are genetically low yielding and less responsive to inputs compared with other cereals and oil seeds.

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Not only are they more prone to pests and diseases, hybrids and genetically modified varieties are not available to enhance productivity.

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The agriculture department has said it plans to increase pulse production by 2 mt and acreage by 4 million ha by 2012.

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Natural rubber prices double in a year:

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The natural rubber (NR) prices have almost doubled in a year.

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The benchmark grade RSS-4 variety was quoted at Rs 128 a kg on Thursday compared with Rs 65 a kg on same day last year.

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The rubber market is now poised to break all records despite good production this season.

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The local market follows its global peers resulting in a sharp increase in the prices in the futures trading.

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According to Rubber Board estimates, production in November increased to 103,000 tonnes compared with 95,550 tonnes in the same month last year.

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Production is expected to be at its peak in this month due to the winter season and supply is expected to improve further.

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The board estimates also revealed that the total stock in the country increased to 247,000 tonnes.

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This is due to the sharp increase in imports and a drop in exports during April-November.

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Wheat Sowing Picks Up Pace Across India

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

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Wheat sowing picks up pace across India

Wheat sowing picks up pace across India:


As per the latest government estimate, wheat has been sown in around 13.70 million hectares of land till last week, almost 5% more than the same period last year.

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Sowing in India ‘s two main wheat growing province of Punjab and Haryana,which contribute almost 80% of the total country’s production is nearing end.

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Officials believe that  barring delayed harvest kharif crops, cooler temperature in most parts of northern, central and western India added with the recent unseasonal rains should provide an ideal climatic condition for good wheat sowing and early growth.

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The government expects an additional two million tonne of wheat production during the rabi season to offset some of the losses incurred during the kharif harvest.

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However, as per studies done by Indian Council of Agriculture Research, wheat yield can come down by almost 50 kilograms per hectare per day if it is sown very late (beyond December) in northern states.

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The output drop in southern wheat growing states and in Maharashtra and Karnataka is estimated to be around 36 kilograms per hectare per day if the crop is sown very late.

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In Other major Commodities Updates we can read about India’s FM statement on Inflation root cause and launching of in 12 commodities by MCX.


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Inflation due to food items shortage: FM


The current trend in inflation in India is a result of a shortage of food items and not due to a demand-push factor, Union finance minister Pranab Mukherjee told Parliament on Tuesday.

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The food articles index rose an annual 15.6% as at 14 November, up from the previous week’s 14.6% rise.

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The weakest monsoon since 1972 and then floods in parts of the country have hurt farm output and pushed up food prices.

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The finance minister said the government is keeping a close watch on futures trading in commodities.

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The Centre is planning massive investment to boost farm output, the minister said.

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MCX launches EFP in 12 commodities:


The Multi-Commodity Exchange of India (MCX) has introduced the exchange of futures for physicals (EFP) transactions in 12 commodities from Tuesday, the bourse said in a release.

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This process will help traders who have already entered into an agreement for physical trade to take position on futures platform for transparent pricing mechanism.

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In EPF, if the quality of the commodity traded does not match MCX specifications, both parties can then decide on a premium or discount to the settlement price on the futures platform on the delivery date.

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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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Sensex to Seek Direction from RBI’s Monetary Policy Review

Sensex to Seek Direction from RBI's Monetary Policy Review

Sensex to Seek Direction from RBI's Monetary Policy Review

Dalal Street will closely track the Reserve Bank‘s monetary policy review this week to seek direction, as weak global and domestic cues may continue to dampen sentiments in opening trade on Monday, experts say.

Besides, the expiry of the futures and option contracts this week is expected to keep the market volatile.

With global markets deteriorating and shares of Reliance Industries acting as a drag, market may open weak on Monday.

Marketmen said as valuations are overstretched, investors are now booking profit even at the slightest bad news.

Also, liquidity crunch is keeping frontline stocks under pressure.

On Friday, RIL scrips declined by 4.5 per cent.

“RIL, which is already reeling under uncertainty over the ongoing court case, would face further pressure. The scrip would be a dampener on the already weak market sentiment,” SMC Global Vice President Rajesh Jain said.

The Bombay Stock Exchange barometer Sensex lost three per cent, its biggest weekly fall in 11 weeks, to 16,810.81 points.

The index is up over 74 per cent so far in 2009, aided by foreign fund flows of over $14 billion.

Interest Rate Futures Section – Final Part :)

Interest Rate Futures Section Final Part

Interest Rate Futures Section Final Part

Hello Friends, we are here with the Final Part of our Interest Rate Futures educational section.
We would touch upon the benefits of the Interest Rate Futures and the future scenario related to it.

Here we go :

Key benefits of Interest Rate Futures:

Directional trading

As there is an inverse relationship between interest rate movement and underlying bond prices, so if one has strong view that the interest rates will rise in near future then he can take short position in IRF contracts and can be benefited from the falling futures bond prices.

Hedging portfolio

The holders of the GOI securities are exposed to risk of rising interest rates which in turn results in the reduction in the value of the portfolio.

So in order to protect against a fall in the value of the portfolio they can take short position in IRF.

Calendar spread trading

This spread is also known as an inter-delivery spread.

It is the simultaneous purchase of one delivery month of a given futures contract and the sale of another delivery month of the same underlying on the same exchange.

For example:

Buying a September 09 and simultaneously selling a December 09 contract.
A market participant can profit as the price difference between the two contracts widens.

The either case can also be possible.

Reduce the duration of portfolio:

Bonds with longer maturities are more sensitive to interest rate changes, and bond portfolio with longer duration will be more exposed to the vulnerability of the movement in interest rate.

So portfolio manager who is concerned about the rise in the short term interest rate risk would like to reduce the duration of the portfolio.

By entering into the IRF contract to NSE, the portfolio manager can reduce duration of the portfolio.

Arbitraging between cash and futures market:

Arbitrage is the price difference between the bond prices in underlying bond market and IRF contract without any view about the interest rate movement.

One can earn the risk-less profit from realizing arbitrage opportunity and entering into the IRF contract traded on NSE by initiating cash and carry trade.

Responses After launch:

After the launch of currency futures in August 2008, Interest-rate futures are the first major product to be introduced in India.

The interest rate futures began on August 31,2009 clocking trading volumes of Rs 276 crore in their first day of trade.

Market participants responded passionately to the product launch on the first day.

In around five hours of trading time available after inauguration, 1,475 trades were recorded resulting in 14,559 contracts being traded at a total value of Rs 267.31 crore.

In the beginning only two quarters has been introduced out of four, among which December 2009 was the most active with 13,789 contracts which has been traded actively.

There are nearly 638 members registered for this new product, out of which 21 are banks and there contribution to the total gross volume was 32.48 percent.

Future scenario:

BSE had received regulatory approval for interest rates futures and would launch in 8-10 weeks.

The Multi Commodity Exchange’s foreign exchange derivatives bourse has sought permission to launch trade in interest rate futures.

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INTEREST RATE FUTURES – Part 2

Hello Friends, just an extension of our previous blog on interest rates futures where we touched upon the topic of interest rates future and what is it exactly.

Now we would understand that why is there need for interst rate futures and many more related aspects in this regard.

Here we go :

Why Interest rate futures?

Why Interest rate futures?

Why Interest rate futures?

The risk associated with the interest rate is uncertain and it never has been constant in the past, infact it would not remain constant in future also.

The volatility of interest rates has increased manifold in the last couple of years and recorded 17.40% in 2008 as compared to 8.51% in 2007.

This high fluctuation in volatility increases risk and requires tools to manage those risks.

Interest rate futures are the product for managing such interest rate risk.

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Backbone of Interest Rate Future:

NSE, India’s largest stock exchange, began interest rate futures and offers the same reliable features as it provide to its other products with the following advantages:

Standardization and flexibility

•Price transparency and liquidity

•Leverage effect due to a wider collateral management

•Advance trading software and technological edge

•Centralized clearing supported by guaranteed settlement

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Who can be a part of it?

The major market participants of interest rate futures are

•Banks and Primary Dealers

• Mutual Funds and Insurance Companies

• Corporate Houses and Financial Institutions,

•FIIs and NRIs

• Member Brokers and Retail Investors.

In Final part of this topic (which we would cover in our next blog), we would throw light on the benefits of the Interest Rate Futures and the future scenario related to Interest rate futures.

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Stay Tuned 😉

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INTEREST RATE FUTURES – What’s That?

Hello Friends,

For past weeks we have been coming up with educational and informative inputs on topics like economic indicators, Positive Undertones in the Economy etc;

In this Blog now we would throw light on “Interest rate futures.

What is Interest Rates Future?

What is Interest Rates Future?

What are interest rate futures?

An interest rate futures contract is “an agreement to buy or sell a debt instrument at a specified future date at a price that is fixed today.”

Interest rate futures are useful to those who are willing to trade in future interest rates and would like to benefit from interest rate movements.

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The underlying instrument in this contract is 10 year National Coupon-bearing government of India (GOI) security, whereas the notional coupon is of 7% with semi-annual compounding interest rate.

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The GOI securities are the underlying assets which should have a maturity status between seven-and-a-half years and 12 years from the first day of the delivery month.

Interest Rate Futures are the most widely traded derivatives instrument in the world.

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The total outstanding notional principal amount in Interest Rate Futures is 30.09 times higher than equity index futures.

Interest rates are linked to a variety of economic conditions.

They can change rapidly, influencing investments and debt obligations.

In a market environment where long term debt issuance by the government is increasing and the demand for it is growing, there is a strong need for a cost efficient hedging instrument against interest rate.

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In Next Coming parts, we would try to understand why Interest rate futures are needed, what is the backbone of interest rate futures and many more related aspects in this regard. 🙂

Stay Tuned 😉

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