COMMODITY MARKET

PRESENTED BY

SUBHABRATA ROY SAYANTAN MONDAL

COMMODITY ???
A commodity may be defined as an article, a product or material that is bought and sold. It can be classified as every kind of movable property, except Actionable Claims, Money & Securities. CHARACTERISTICS : product must be in a basic, raw, unprocessed state product has to be fairly standardized Fundamental forces of market demand and supply for the commodity determine the commodity prices The product should have adequate shelf life since the delivery of a commodity through a futures contract is usually deferred to a later date

Spices Oil seeds and oil Energy products

Bullion

COMMODITIES

Vegetables

Pulses
Non ferrous Metals

Others

COMMODITY

MARKET ???

A market where commodities are traded is referred to as a commodity market.

COMMODITY FUTURE:
An agreement between two parties to buy or sell a specified and standardized quantity of a commodity at a certain time in future at a price agreed upon at the time of entering into the contract on the commodity futures exchange.

BENEFITS OF COMMODITY FUTURE

Price Discovery Price Risk Management Import- Export competitiveness Predictable Pricing Benefits for farmers / Agriculturalists Credit accessibility Commodity derivatives markets are extremely transparent Useful for the buyer as well as consumer

COMMODITY EXCHANGE ???

A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai Multi Commodity Exchange of India Limited (MCX) Mumbai

National Multi- Commodity Exchange of India Limited (NMCEIL) Ahmedabad

Indian Commodity Exchange Limited (ICEX), Gurgaon

WHAT MAKES COMMODITY MARKET ATTRACTIVE ???

A good low-risk portfolio diversifier Less volatile, compared with, equities and bonds

A good hedge against any downturn in equities or bonds as there is

High co-relation with changes in inflation Better risk-adjusted returns

INSTRUMENTS AVAILABLE FOR TRADING

INITIAL MARGIN

FUTURE MARKET

MARKING-TOMARKET MARGIN MAINTENANCE MARGIN

INSTRUMENTS

OPTION

CALL

PUT

FORWARD CONTRACT

PARTICIPANTS OF COMMODITY MARKET

HEDGERS

SPECULATORS

ARBITRAGERS

PARTICIPANTS

WORKING PROCEDURES

TRADING

CLEARING SETTLEMENT

SETTLEMENT
Settlement : Daily Settlement Price Final Settlement Price

Settlement Mechanism : Daily Mark-To-Market Settlement Final Settlement

Current scenario of Indian commodity market

Total value of trading at 23 commodity exchanges from April to December 15 of the 2010-11 financial year was Rs 78,32,483 crore. Turnover at Indian commodity bourses rose 49.55% to Rs 82.70 lakh crore ($1.83 trillion) in the first three quarters to December Total value of trade for bullion jumped 69.89% to Rs 37.54 lakh crore in April-Dec period

Volumes in agri-commodities rose by a mere 7.48% to Rs 9.69 lakh crore

For metals it surged 64.41% to Rs 19.37 lakh crore

THANK YOU