HISTORY

 The history of organized commodity derivatives in

India goes back to the nineteenth century when
Cotton Trade Association started futures trading in
1875.
 derivatives trading started in oilseed in Bombay
(1900), raw jute and jute goods in Calcutta (1912),
Wheat in Hapur (1913) and Bullion in Bombay (1920).
 The parliament passed the Forward Contracts
(Regulation) Act, 1952, which regulated contracts in
Commodities all over the India
WHAT IS COMMODITIES MARKET
 A commodity market is a market that trades in
primary economic sector rather than manufactured
products. Soft commodities are agricultural products
such as wheat, coffee, cocoa, fruit and sugar. Hard
commodities are mined, such as gold and oil.[
DEFINATION
 A commodity market is a physical or virtual
marketplace for buying, selling and trading raw or
primary products, and there are currently about 50
major commodity markets worldwide that facilitate
investment trade in approximately 100 primary
commodities.
TYPES OF COMMODITIES
 characteristics are fit for dealing
in commodity exchange:
 1. Homogeneity

 2. Durability

 3. Gradability

 4. Price Fluctuation

 5. Open Supply
OBJECTIVES
 To examine price discovery and price volatility in the
commodity future market.
 To investigate macroeconomic dynamics of
commodity future market.
 To examine the impact of futures market on
commodity inflation.
PARTICIPANTS
 HEDGERS
 SPECULATORS
 ARBITRAGERS
BEHAVIOUR
HEDGES SPECULATORS ARBITRAGEURS

Lower risk appetite Higher risk appetite Medium risk appetite

Use futures to reduce risk Make aggressive bets Help in price discovery

Making a profit is not a Main aim is to make a Main aim is to make a

priority profit profit
BENEFITS
 HEDGING
 SPECULATION
 LIQUIDITY
 PRICE DISCOVERY
 FLEXIBILITY
STRUCTURE
PROCESS