...Commodity Derivatives Market in India: Development, Regulation and Future Prospects Introduction The Indian economy is witnessing a mini revolution in commodity derivatives and risk management. Commodity options trading and cash settlement of commodity futures had been banned since 1952 and until 2002 commodity derivatives market was virtually nonexistent, except some negligible activity on an OTC basis. Now in September 2005, the country has 3 national level electronic exchanges and 21 regional exchanges for trading commodity derivatives. As many as eighty (80) commodities have been allowed for derivatives trading. The value of trading has been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well, seems to be set to touch $5 Trillion in a few years. Chequred History The history of organized commodity derivatives in India goes back to the nineteenth century when the Cotton Trade Association started futures trading in 1875, barely about a decade after the commodity derivatives started in Chicago. Over time the derivatives market developed in several other commodities in India. Following cotton, derivatives trading started in oilseeds in Bombay (1900), raw jute and jute goods in Calcutta (1912), wheat in Hapur (1913) and in Bullion in Bombay (1920). However, many feared that derivatives fuelled unnecessary speculation in essential commodities, and were detrimental to the healthy functioning of the markets for the underlying commodities...
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...Issues and Concerns of Commodity Derivative Markets in India: An Agenda for Research Nilanjan Ghosh 1. Introduction Commodity derivative markets have traditionally been a contentious issue at various policy forums across the world, particularly with the imbroglio created by allegations from various corners that they encourage excessive speculation and are therefore responsible for the recent commodity price escalation. While this suspicion of excessive speculation in the commodity markets has always been there among policymakers in developing nations like India, it has become more widespread since 2008 in the wake of worldwide inflationary pressures on food and energy. The sudden deflation in the value of various assets underlying different derivatives, which includes commodity derivatives, in the wake of the global meltdown has provoked greater apprehension about the economic utility of futures markets. The suspicion has reached such a high that even the U.S., the biggest proponent of market forces with the most active commodity exchanges in the world, is considering new modes of regulation, and is also investigating the role of commodity derivative trading in the steep rise in prices of wheat, rice, and crude oil. On the other hand, ever since commodity derivative trading was allowed in India in the new millennium, there has always been a hue and cry against such markets, with the alleged notion of excessive “speculation”, though there has rarely been any evidence for it. Rather...
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...SUMMER INTERNSHIP REPORT A REPORT ON Steel Price Fluctuations and its Determinants and its Correlation with Different Factors Submitted By- Ajaya Kumar Mall (10BSPHH010049) INDIAINFOLINE LIMITED A Report On Steel Price Fluctuations and its Determinants and its Correlation with Different Factors Submitted by: Ajaya Kumar Mall (10BSPHH010049) A report submitted in partial fulfillment of the requirements of MBA program of IBS Hyderabad INDIAINFOLINE LIMITED Distribution List: Prof. C. Padmavathi Mr. Khamis Raza Taqvi Faculty Guide Company Guide Dept. Of Finance Asst. Vice President IBS Hyderabad IndiaInfoline Limited Date of Submission: 13th May, 2010 AUTHORIZATION This report has been prepared under the guidance of Mr. Khamis Raza Taqvi, Associate vice President of IndiaInfoline Limited, Mr. Sachin Jain, Team Manager, IndiaInfoline Limited and Dr C Padmavathi, Department of Finance, IBS Hyderabad. This report is submitted as partial fulfillment of the requirement of MBA Program of IBS Hyderabad. Date: 13 May, 2011 Ajaya Kumar Mall ...
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...Chapter – I INTRODUCTION 1.Introduction of Project Work : Why Commodity Futures? ADVANTAGES OF FUTURES MARKET TO ITS VARIOUS PARTICIPANTS Stockiest / Jewelers / Farmers | | Traders, Jobbers & Arbitragers | * Can hedge their underlying * Get an extensive market * Can get loan against Warehouse Receipts | | Trading Opportunity | Investment Opportunity | Corporates | | Additional Advantage | * Can hedge by offsetting product exposure * Can hedge by parking only margin amount * Can buy goods without agents with Quality Assurance | | Spread Trading Opportunity | Arbitrage Opportunity | TABLE-1.1 Why Indian Commodity Exchange? India is essentially a commodity based economy constituting of Agriculture, Energy, Precious Metals and Base Metals. Couple of unique features / advantage seen in our exchanges, which is not seen elsewhere, are: 1. Timings: Our Trade timings are well matched with Global Market timings. 2. Number of commodities: Nowhere in the world more than 8 to 10 commodities are traded in a single exchange, but our exchanges are successfully managing over 40 commodities individually. Why Sharekhan? Superior & Consistant Research Performance of…. 1. Cutting Edge Analysis of Major Commodities 2. Relevent Analysis of Market News & Information 3. Sound Technical Analysis for Short Term Trends 4. Special Reports such as… * Hedge Solutions: To offset Product Exposure...
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...Graduate School of Development Studies A Research Paper presented by: Celeste Aida Molina Fernández (Guatemala) in partial fulfilment of the requirements for obtaining the degree of MASTERS OF ARTS IN DEVELOPMENT STUDIES Specialisation: Rural Livelihoods and Global Change (RLGC) Members of the examining committee: Prof. Dr Max Spoor Prof. Dr Peter Knorringa The Hague, The Netherlands November, 2010 Disclaimer: This document represents part of the author’s study programme while at the Institute of Social Studies. The views stated therein are those of the author and not necessarily those of the Institute. Research papers are not made available for circulation outside of the Institute. Inquiries: Postal address: Institute of Social Studies P.O. Box 29776 2502 LT The Hague The Netherlands Location: Kortenaerkade 12 2518 AX The Hague The Netherlands Telephone: +31 70 426 0460 Fax: +31 70 426 0799 Acknowledgments I would like to express my deepest appreciation to all the people who in one way or another contributed to the completion of this study, especially the interviewees, who generously shared their time and knowledge about the coffee sector in Ethiopia. My sincerest appreciation goes to Bilisuma Dito, who first introduced me to the ECX and provided me with key contacts for the fieldwork. Many thanks to Martha Kibru, Saba Yifredew...
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...mining company Reference Code: ML00007-065 Publication Date: January 2013 WWW.MARKETLINE.COM MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED GLENCORE & XSTRATA: CREATING THE FOURTH LARGEST GLOBAL MINING COMPANY © MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED ML00007-065 /Published 01/2013 Page | 1 OVERVIEW Catalyst Glencore International, a commodity trading giant, is seeking to merge with diversified mining company Xstrata. The move was announced in February 2012 with the proposal accepted by shareholders in November 2012. The deal is worth $31bn and would create the fourth largest mining company in the world behind the top three of BHP Billiton, Vale, and Rio Tinto. The company would also possess leading positions in other commodities in power generation and agricultural products. Summary Glencore is a company which operates in commodity markets, including mining. The company engages in both industrial activity and marketing, which allows it to safeguard against volatilities in an individual market. Further, by engaging in marketing, the company is able to adapt more effectively to adverse conditions. Glencore has demonstrated value creation in its acquisitions, with notable acquisitions including Kazzinc and Viterra. The company’s size also now allows it to negotiate big contracts, as it did with Rusal. Glencore was fast tracked into the London FTSE stock exchange during its initial public offering (IPO)...
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...ทิศทางโลจิสติกส์ประเทศไทยและทิศทางงานวิจย ั รศ.ดร.ดวงพรรณ กริชชาญชัย สํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ั ภายใต้ สํานักงานกองทุนสนับสนุนการวิจย (สกว.) ั egdkc@mahidol.ac.th เครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่าและโลจิสติกส์ (ThaiVCML) และสํานักประสานงาน ั ชุ ด โครงการวิจย โลจิส ติก ส์ ซึงได้ร บ การสนั บสนุ นโดย สํา นั ก งานกองทุ น สนับ สนุ น การวิจ ย (สกว.)ได้ ั ั ั ดําเนินงานด้านโลจิสติกส์และโซ่อุปทานมาตังแต่ปี 2545 วัตถุประสงค์หลัก คือ การสร้างให้เกิดงานวิจยและ ั องค์ความรู้ด้านการจัดการโลจิสติกส์และโซ่อุ ปทานขึนในประเทศ โดยใช้กลไกประสานงานวิจยในกลุ่ ม ั เครือข่ายนักวิชาการให้เชือมโยงกับโจทย์จริงจากภาครัฐและภาคอุตสาหกรรม ในการนี ทางสํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ได้รวบรวมข้อมูลทีผ่านมาทังหมดใน ั ประเทศรวมถึงงานวิจยด้านโลจิสติกส์และโซ่อุปทานในกลุ่มเครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่า ั ั ั และโลจิสติกส์ (ThaiVCML) และกลุ่มงานวิจยทีสนับสนุ น โดย สํานักงานกองทุนสนับสนุ นการวิจย (สกว.) ั และการระดมสมองในงานสัมมนาเชิงปฏิบตการระดมสมองเพือกําหนดทิศทางโลจิสติกส์ของไทย ในเมือวัน ั ิ อังคารที 9 ธันวาคม 2551 ทีผ่านมานัน สรุปความได้ดงนี คือ ั 1) ประเทศไทยใช้คาว่า “ โลจิสติกส์” เป็ นเครืองมือเชิงกลยุทธ์ เพือนําสู่วตถุประสงค์ ํ ั ความสามารถในการแข่งขันของประเทศ ” ( National Competitiveness ) 2) “ โลจิสติกส์” ต้องมี “บริบท” ให้อยู่ เพราะหลักการจัดการโลจิสติกส์จะขึนตามบริบท และ สิงแวดล้อมทีเปลียนไป 3) บริบทของโลจิสติกส์ในประเทศไทย มี 2 ระดับใหญ่ๆ คือ ระดับจุลภาค และระดับมหภาค โดย กรอบของโลจิสติกส์ในประเทศไทยสามารถสรุปได้ดงภาพ คือ ั 1 หากจะแบ่งระบบโลจิสติกส์ของไทยตามบริบทแบ่งได้...
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...Review of Warehouse Receipt System and Inventory Credit Initiatives in Eastern & Southern Africa Final report commissioned by UNCTAD under the All ACP Agricultural Commodities Programme (AAACP) *The views expressed in this paper are those of the author and do not necessarily reflect the views of the United Nations September 2009 CONTENTS CONTENTS ............................................................................................................................................. i ACKNOWLEDGEMENT .....................................................................................................................iii GLOSSARY OF ABBREVIATIONS .................................................................................................. iv GLOSSARY OF ABBREVIATIONS .................................................................................................. iv SUMMARY ............................................................................................................................................ 1 Introduction ....................................................................................................................... 1 Observations on the different approaches ......................................................................... 1 Policy conclusions and recommendations ........................................................................ 3 Specific proposals .....................................................................
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...Forest Hill can be classified as a “small paperboard manufacturer that produces a broad line of paperboard in large reels.” Forest Hill Strategy: According to the case, “as a small company competing against a commodity market, management believes Forest Hill must offer a full range of both products and services. Thus, Forest Hill’s strategy is to create a niche based on service and rapid response to customer needs. (Not much innovation in the product, but top tier service, which can be quantified by value estimators.) Forest Hill competes in an industry that is being stagnated by the rise in electronic communications (e.g. email) and imports. According to the case, Forest Hill operates in a cyclical environment due to customer buying habits. An advantage for Forest Hill is that there are high barriers to entry within this market due to equipment costs and governmental regulation. Forest Hill can be classified as a “small paperboard manufacturer that produces a broad line of paperboard in large reels.” Forest Hill Strategy: According to the case, “as a small company competing against a commodity market, management believes Forest Hill must offer a full range of both products and services. Thus, Forest Hill’s strategy is to create a niche based on service and rapid response to customer needs. (Not much innovation in the product, but top tier service, which can be quantified by value estimators.) Forest Hill competes in an industry that is being stagnated by the rise in electronic...
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... September 27th – November 25th the price rose by almost 20% (from USD 3.297 to USD 3.901). Furthermore, natural gas has a seasonal trend (like other commodities) and the demand for it is usually higher during the winter (from November to March) because natural gas is used to heat residential and commercial buildings. In this case of increasing price,the best strategies are buying now : we can do it buying now at the spot price or buy now a future contract for natural gas. The only difference between the two strategies is the delivery : in the first scenario we will take delivery now whereas in the second one the delivery will take on November the 26th . As mentioned above ,a good purchasing strategy could be buy now ,September the 27th , at the spot price USD 3.50/MMBtu and taking now delivery . We have to buy CAN 5,000,000 of natural gas on the NYMEX.For doing that we are going to convert our currency in USD : on September the 27th the currency exchange is USD 1= CAN 0.9708 ,so our amount is USD 4,854,000 and we can buy 1,386,857.14 MMBtu of natural gas. ADVANTAGES Firstly, the main goal of a supplier manager is to save money instead of speculate on the commodities exchange : if we think that the price is going to increase on November 25th (and this is what emerges from our forecasting) we should buy the commodity at the lowest possible price. As a matter of fact , many industry participants use this strategy : storing gas when prices are low, and withdrawing and...
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.... Identify the controllable and uncontrollable elements that Starbucks has encountered in entering global markets. Answer: The controllable factors that I believe Starbucks has encountered entering the global market are similar to the controllable factors they have encountered in their domestic market. The controllable factors are product, price, place, and promotion. Starbucks has millions of consumers around the globe and is able to adjust to fit the different tastes and expectations of different cultures based on their products, prices, places Starbucks is available and how Starbucks markets themselves. The marketing research group of Starbucks also can evaluate to make sure the products they are providing to different countries and cultures is the right fit for them. When it comes to the uncontrollable elements that Starbucks has encountered entering the global markets, I can think of three factors. The first major factor for Starbucks is the prices of coffee in the world commodity markets. The price of coffee may be affected for example by a drought, just like corn if there is a drought the price of corn goes up. A factor that Starbucks also can’t control is the customers’ income. When the economy is doing bad then people spend less which means people would possibly buy less Starbucks then. The last factor that Starbucks has no control over is the variation in world currency rates. For example, based on (finance.yahoo.com) 1 US dollar is equal to 0.75 Euro right now. ...
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...History of commodities: There is a belief among the economists that the principles, functions, trading and fundamentals of commodities exchange are centuries old and are been practiced since a long time. These kinds of markets were established in Greece and Rome for the fist time with a fixed time and place for trading, common barter and currency system, and practice of contracting for a future date. There are evidences which shows the fact that the first exchange similar to those of today were established in France and England in the 15th, 16th and 17th centuries. In the 18th century, commodity exchanges followed some of the practices of the medieval fair (where in a marketplace was created to trade commodities) in adopting rules for self-regulation and methods of arbitration and enforcement. During this period the trade was restricted only to the local areas. This trade was declined its importance when there was an enhancement in the telecommunication, transportation and with the advent of modern cities. Specialized market centers were developed in their place in many parts of the world, which facilitated Spot, or cash, trading and forward contracting. The Chicago Board of Trade was the first commodity exchange in the United States of America to be opened in 1848, and is still the largest exchange as well. The futures contract was developed here in the 1860s. The New York Cotton Exchange founded in 1871 was also among few other early United States exchanges. During the Great...
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...Commodity Exchange Market in Bangladesh Prepared by Kamal Uddin Department of Banking &Insurance Faculty of Business Studies, University of Dhaka Outline Rationale Define Commodity & Commodity Exchange Market How Commodity Exchange Market Works? Necessity of Commodity Exchange Market in our Economy Requirement for a Commodity Exchange Market What Bangladesh Doing? Recommendation Rationale: Price Volatility in Our Economy Reason Behind Price Volatility • Intermediaries between producers & end-consumers. • Syndication. • Absence of a proper market system. To remove this barrier a proper market system is required where buyer and seller will have the regular & updated information of market, they will have direct access to market for buying and selling their desired products. This can be done by establishing a Commodity Exchange Market Define Commodity and Commodity Exchange • A Commodity is a product which has a commercial value. It can be produced, bought, sold and consumed. • A commodities exchange is an exchange, just like any Stock Exchange where various commodities and derivatives products are traded. Most Commodity Exchanges across the world trade in agricultural products and other raw materials • To be traded on an Exchange must meet certain specification regarding self life, quality standard, demand and supply and some more. Functionalities Spot or Cash • Direct buy and sales • Usually for immediate consumption • Immediate delivery &...
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...Enron was an energy trading company formed in 1985, based in Texas and employed around 21,000 people-before it went bankrupt. Fraudulent accounting practices allowed it to become one of the largest companies in the US. Enron invented the trading of communications, power, and weather securities. It dominated the trading and instead of being successful, it became the largest financial scandal in history as a symbol of well-planned corporate fraud. Enron created the phony California electricity crisis. There was never a shortage of power in California. Phone recordings between Enron traders and California power plant operators reveal the traders asking plant managers to "get a little creative" in shutting down plants for "repairs." About 30 to 50 percent of California's energy plants shut down as suggested by the traders as Enron drove the price of electricity nine times higher. By November 2001, after a series of scandals associated with their accounting practices, Enron stood at the edge of the largest bankruptcy in history. Enron was thought to be a blue chip stock but there bankruptcy caused a terrible event in the financial world. The executives at Enron were indicted on different charges and were sent to prison. Employees and stockholders lost billions of dollars, while the lawsuits provided very little money in return. Because of this scandal, new regulations were developed to improve the reliability of the financial reporting and require the accounting firms to be independent...
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...“N” Day Breakout Model on Commodity Market: An Empirical Investigation Zhenyi Yang 12/12/2012 1. Introduction There are various strategies to make profits on the commodity markets. The “N” day breakout model is one of the easiest model. However, it is a very effective model and used by many traders. The article uses the “N” day breakout model, combined with the “fixed fractional” risk management scheme, to study the return of the commodity market. The article also compares the different outcomes with different data manipulation method and the potential reasons behind the difference. 2. The “N” Day Break Out Model The N day break out model utilizes the method that the futures are longed at N day high and shorted at M day low. The rational explanation of the method is that the futures usually continue to rise after a breakout its long-term high. Also, the futures continue to fall after it breaks its short-term low. To simplify the problem, in this article, it chooses the 100 day high as the buying point and the 10 day low as the selling point. The period of study ranges from Dec 2002 to Dec 2012. Moreover, the article also studies the maximum profit one million account balance would make with this strategy with each commodity does not exceed 1% risk. 3. Data Manipulation Because the commodity future expires after one or two years, for a longer period time, the charts of different futures contracts needs to be connected. Some methods are continuous, which...
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