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Commodity Exchange in India

SURFING THROUGH - THE MARKET STUDY

What is a Commodity Exchange?

It is an exchange where various commodities (minerals and edible products) and derivative agreements (share or currency) are traded. It usually trades future contracts on commodities, where two parties agree to buy or sell a specified commodity at a specified future date at a price agreed today.

Commodity exchange in India In India there are 25 recognized future exchanges, of which there are three national level multi-commodity exchanges. Government of India has allowed forward transactions in commodities through Online Commodity Exchanges, a modification of traditional business known as Adhat and Vayda Vyapar to facilitate better risk coverage and delivery of commodities.

National Exchanges in India National Commodity and Derivatives Exchange Limited (NCDEX) Multi Commodity Exchange of India Limited (MCX) National Multi-Commodity Exchange of India Limited (NMCEIL) All the Commodity exchanges are set up under the control of FMC (Forward Market Commission) a regulatory authority overseen by Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India.

Other regional Commodity exchanges


Ace Derivatives and Commodity Exchange Limited. Bombay Commodity Exchange Ltd. East India Jute & Hessian Exchange Ltd. National Board of Trade. Haryana Commodities Ltd. Vijay Beopar Chamber Ltd. Spices and Oilseeds Exchange Ltd. First Commodity Exchange of India Ltd. Cotton Association of India. Chamber Of Commerce. India Pepper & Spice Trade Association Ltd.

Trading permission granted in the commodities in 2010 by FMC


Fibres- Kapas, Kalyan, Kapas, Sacking, Raw Jute. Spices- Coriander / Dhania, Cardamom, Turmeric, Pepper, Jeera / Cumin seed. Edible Oilseeds & Oil- Crude Palm Oil, RBD Palmoline, Rape / Mustard Seed, Copra / Coconut Oil, Soya Bean. Refined Soya Oil, Yellow Soy Bean Meal, Castor Seed, Kapas Khali / Cottonseed, Oilcake Expeller Mustard Oil (Kachhi Ghani). Pulses- Chana. Energy Products- Gasoline, Natural Gas, Imported Thermal Coal, Electricity (Monthly & Weekly), Heating Oil, Aviation Turbine Fuel (ATF), Crude Oil, Light Sweet Crude Oil, Brent Crude Oil. Vegetables & Others- Potato, Barley, Maize-Feed/Ind. Grade, Yellow / Red Maize, Wheat, Almond, Isabgul seed, Guar seed, Coffee, Carbon Credit (CER) Rubber, Mentha Oil, Gur, Menthol Flakes, Menthol Crystal, Guar Gum.

Trading permission granted in the commodities in 2010 by FMC

Metals : Copper Aluminium Lead Mild Steel Ingot / Billets Steel Long Nickel Platinum Zinc

Tin Gold ( 1 Kg.) Gold Mini (100 Gms) Gold HNI Gold Guinea Gold International Silver (30 Kg.) Silver HNI

Participants in Commodity Future

Farmers/Producers Merchandisers/Traders Importers Exporters Consumers/Industry Commodity Financers Agriculture credit providing agencies Corporate having price risk exposure in Commodities.

COMMODITIES

Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground reservoirs. Oil and gas account for about 60 per cent of the total world's primary energy consumption. Almost all industries including agriculture are dependent on oil in one way or other. Oil & lubricants, perfumes, etc. are largely and directly affected by the oil prices. India ranks among the top 10 largest oil-consuming countries. The country's total oil consumption is about 2.2 million barrels per day. India imports about 70 per cent of its total oil consumption and it makes no exports.

Market shares
SPOT MARKET RATE: CRUDE OIL 1BBL Mumbai: 3720.00 (as recorded on 19th ) FUTURE MARKET: Symbol CRUDE OIL CRUDE OIL CRUDE OIL Expiry Month 21MAR2011 18APR2011 19MAY2011 Unit 1BBL 1BBL 1BBL Open(Rs) 3891.00 3925.00 3898.00 High(Rs) 3922.00 3964.00 3995.00 Low(Rs) 3890.00 3926.00 3898.00 Change(%) -0.08% 0.35% 3.34%

(Figures recorded as on 19th Nov 2010)

Value of crude oil in the commodities market 2009-2010

YEAR 2009 2010

COMMODITY CONTRACT CRUDE OIL CRUDE OIL

VALUE(IN LAKHS) 121020964.7 134063326.3

Gasoline
Gasoline is a petroleum-derived liquid mixture which is primarily used as a fuel in internal combustion engines It is also used as a solvent, mainly known for its ability to dilute paints Gasoline is largely a mixture of hydrocarbons (mixture of n- paraffins, naphthenes, olefins and aromatics), some may contain significant quantities of ethanol and some may contain small quantities of additives such as tertiary butyl methyl ether as anti-knock agents to increase the octane rating. TYPICAL COMPOSITION OF GASOLINE
GENERAL NAME Aliphatic straight chain Aliphatic branched Aliphatic cyclic Aromatic EXAMPLES heptane isooctane cyclopentane ethyl benzene 20-30 20-30
PERCENTAGE
30-50

Gasolne in the commodities market 20092010

Value of gasolne in the commodities market 2009-2010

Natural gas

Natural Gas, touted as the clean fuel of 21st century, is a gas consisting primarily of methane, typically with 0-20% higher hydrocarbons (primarily ethane). It is fast emerging as a major energy source all over the world and is estimated to contribute around 26% of global energy consumption by 2030. Demand for natural gas growing at rapid clip during the past decade is expected to gather further momentum due to high price of oil as well as environmental concerns. Spot market rate: natural gas 1mmbtu HAZIRA-173.60 (as on 12th nov 2010) 1 mmBTU (million British Thermal Units) =25.2 SCM (Standard Cubic Metre) Futures market: Symbol NATURAL GAS NATURAL GAS NATURAL GAS ExpiryMonth 25JAN2011 27DEC2010 23NOV2010 Unit 1mmBTU 1mmBTU 1mmBTU Open(Rs) 188.80 183.70 173.40 High(Rs) 192.00 188.50 178.50 Low(Rs) 188.00 183.70 173.40 Change(%) 2.36 2.52 2.79 (Figures recorded as on 16th Nov 2010)

Value of natural gas in the commodities market 2009-2010


Value (Rs. In Lacs)

28000000 27000000 26000000 25000000

Value (Rs. In Lacs)

24000000
23000000 22000000 NATURALGAS 2009 NATURALGAS 2010

Value (Rs. In Year CommodityContract 2009 NATURALGAS 2010 NATURALGAS Lacs) 27497924.35 23932799.95

SILVER
Silver imports into India for domestic consumption in 2002 was 3,400 tons down 25 % from record 4,540 tons in 2001.Open General License (OGL) imports are the only significant source of supply to the Indian market. Non-duty paid silver for the export sector rose sharply in 2002, up by close to 200% year-on-year to 150 tons. Around 50% of India's silver requirements last year were met through imports of Chinese silver and other important sources of supply being UK, CIS, Australia and Dubai. Indian industrial demand in 2002 is estimated at 1375 tons down by 13 % from 1,579 tons in 2001. India is still one of the largest users of silver in the world, ranking alongside Industrial giants like Japan and the United States. By contrast with United States and Japan, Indian industrial offtake for fabrication in hardcore industrial applications like electronics and brazing alloys accounts for only 15 %.

SILVER

India Industrial Fabrication , 2002


Percentage

Pharmacy & Chemicals Foil Plating Solders & Brazing Electrical Photography Jari

22.4 9 13.7 5.4 13.5 0.85 17.1

Share prices through the years

Gold
India is the world's largest consumer of gold. Indians normally buy about 25 per cent of the world's gold, purchasing around 700 - 750 tonnes of gold every year. However, the sharp price increase in 2008 and 2009 has impacted demand with total demand in 2008 dipping to 660 tonnes. It is further expected to shrink in 2009 with demand in first three quarters of 2009 totaling only around 265 tonnes against 553.5 tonnes in the same period of the previous year. As India's domestic primary production of gold is very less, at around 23 tonnes a year, the country imports most of its domestic requirement. Thus, India is also the largest importer of the yellow metal and has averaged imports of around 600 tonnes a year. However, 2008 imports dipped to around 400 tonnes of gold and it is further expected to dip to around 200-220 tonnes in 2009 owing to high prices. Gold hoarding tendency is well engrained in the Indian society and unofficial stocks held by Indians is estimated to be well above 15,000 tonnes, which is around 9% of the total global gold stocks. Facilities for refining, assaying, making them into standard bars, coins in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively.

Market moving factors


India is the world's largest consumer of gold. Indians normally buy about 25 per cent of the world's gold, purchasing around 700 - 750 tonnes of gold every year. However, the sharp price increase in 2008 and 2009 has impacted demand with total demand in 2008 dipping to 660 tonnes. It is further expected to shrink in 2009 with demand in first three quarters of 2009 totaling only around 265 tonnes against 553.5 tonnes in the same period of the previous year. As India's domestic primary production of gold is very less, at around 2-3 tonnes a year, the country imports most of its domestic requirement. Thus, India is also the largest importer of the yellow metal and has averaged imports of around 600 tonnes a year. However, 2008 imports dipped to around 400 tonnes of gold and it is further expected to dip to around 200-220 tonnes in 2009 owing to high prices. Gold hoarding tendency is well engrained in the Indian society and unofficial stocks held by Indians is estimated to be well above 15,000 tonnes, which is around 9% of the total global gold stocks. Facilities for refining, assaying, making them into standard bars, coins in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively.

Gold Guinea

CARDAMOM
Cardamom is the 'Queen of Spices' as it is one of the most exotic and highly prized spices. Cardamom plants normally start bearing two years after planting. There are three distinctive types of cardamom grown in India viz., Malabar, Mysore and Ceylon type. The two major commercial varieties of small cardamom in the world are the Malabar and the Guatemalan. Indian cardamom is slightly smaller, but more aromatic.
SPOT MARKET RATE: CARDAMOM 1KG VANDANMEDU-1025.70 (as on 19th Nov 2010) FUTURES MARKET: Symbol CARDAMOM CARDAMOM CARDAMOM Expiry Month 15JAN2011 15FEB2011 15MAR2011 Unit 1KGS 1KGS 1KGS Open(Rs) 990.00 980.00 990.00 High(Rs) 1000.00 1000.00 997.50 Low(Rs) 965.10 968.00 973.00 Change(%) -2.03% -1.16% -1.43% (Figures recorded as on 19th Nov 2010)

VALUE OF CARDAMOM IN THE COMMODITIES MARKET 2009-2010

Year 2009 2010

Commodity Contract CARDAMOM CARDAMOM

Value (in lakhs) 182346.38 23932799.95

Almond
Almonds are commonly sold shelled. Shelling almonds refers to removing the shell to reveal the seed. Sweet almonds and Bitter almonds are two forms of almonds. Chocolate confectionary, bakery and snacking are the three major global categories for almond usage. The annual global Sweet almond production on shelled-basis has been in the range of 7 - 8.5 lakh tonnes in the recent years. The other producing countries are Australia, Turkey, Chile, European Union, China and India with a production of 26,000 tonnes, 16,000, 9500, 79,800, 1,500 and 1,200 tonnes on a shelled basis in 2008-09. Most of the manual shelling of almonds in India is undertaken at Bombay and New Delhi, from where the shelled almonds are transported to other consumption centres.

Market share prices


SPOT MARKET RATE: ALMOND1KG DELHI-351.00 (as on 19th Nov 2010) FUTURES MARKET: Symbol ALMOND ALMOND Expiry Month 31DEC2010 31NOV2010 Unit 1KGS 1KGS Open(Rs) 295.75 321.25 High(Rs) 296.00 321.25 Low(Rs) 295.75 321.25 Change(%) -2.87% -2.58% (Figures recorded as on 19th Nov 2010)

Value of Almond in Commodities Market (2009-2010)

Year 2009

Commodity Contract ALMOND

Value (in lakhs) 103971.53

2010

ALMOND

10355.82

NICKEL
Nickel is a silvery-white lustrous metal with a slight golden tinge. It is extremely resistant to corrosion, low conductivity of heat and electricity, tough and hard, ferromagnetic etc. The metal is primarily an industrial metal and is required as an important ingredient in over 3000 products. Manufacture of stainless steel accounts for 65 percent of global nickel output. Rising demand and limited supply is the major feature of global nickel industry at present. Spot Market price: NICKEL 1 KGS Mumbai - 981.40 (as recorded on 19th November 2010) Futures Market prices:
Symbol ExpiryMonth Unit Open(Rs) High(Rs) Low(Rs) Change(%) NICKEL 31JAN2011 1KGS 1001.90 1018.00 999.80 -0.62 NICKEL 31DEC2010 1KGS 994.00 1009.90 987.80 -0.44 NICKEL 30NOV2010 1KGS 987.20 999.80 977.50 -0.50

Value of Nickel in Commodities Market (2009-2010)


Value (Rs. In Lakhs)

45000000 40000000 35000000 30000000 25000000 20000000 15000000 10000000 5000000 0


NICKEL 2009 NICKEL 2010

Value (Rs. In Lakhs)

Year 2009 2010

CommodityHead NICKEL NICKEL

Value (Rs. In Lakhs) 18977263.43 41187067.08

Platinum
Platinum is corrosion resistant and is more precious than gold. Platinum's wear- and tarnish-resistance characteristics are well suited for making fine jewelry. Global Supply Demand Scenario The platinum mining industry is very capital intensive and it is reported that approximately 10 tonnes of raw ore has to be mined to produce just one pure ounce of platinum. Indian Platinum Market India's consumption of platinum in 2008-09 is estimated to be around 932 kgs, which is expected to rise to around 1200 kgs in 2009-10. Measurement Weight Conversion Table
To Convert from Troy ounce Troy ounce TO gram Kilo tonnes Multiply by 31.1035 0.0311035 32.1507

Million troy ounce Troy ounce

tonnes

Troy ounce

32150.7

Value of platinum in the commodities market 2009- 2010

Aluminium
Aluminium is the third most abundant element in the Earth's crust. Aluminum is resistant to weather. India is considered the fifth largest producer of aluminium in the world. India has emerged as a net exporter of aluminium, on competitive terms. Government monopoly, in terms of aluminium production, removal of price and distribution control over aluminium, has been diluted in favour of private sector. About a decade back, the primary Indian aluminium producers were BALCO, NALCO, INDAL, HINDALCO and MALCO. Of the five, two (BALCO and NALCO) were in the public sector while the other three were in the private sectorIt is estimated at about 3037 million tonnes for all categories of bauxite (proved, probable and possible). With the present level of consumption of aluminum, the identified reserves would have an estimated life of over 350 years. India's reserves are estimated to be 7.5 per cent of the total deposits and installed capacity is about 3 per cent of the world.

Share Market Prices


SPOT MARKET RATE: ALUMINIUM 1Kg Mumbai - 102.25 (as on 19.11.2010) Symbol: Aluminium Future 31JAN2011 date Open 103.35 High 103.85 Low 103.10 Change% -0.24% Aluminium 31DEC2010 104.45 105.80 103.60 -1.05% Aluminium 30NOV2010 103.30 104.70 102.25 -0.91%

Value of Aluminium in the Commodities Market from 2009-2010

Indias Place in thw World Market

COMMODITY
RICE (PADDY) WHEAT PULSES

INDIA

WORLD

SHARE

RANK

240 74 13

2049 599 55

11.71 12.35 23.64

THIRD SECOND FIRST

GROUNDNUT
RAPE SEED SUGARCANE TEA COFFEE (GREEN) JUTE & FIBRES

6
6 315 0.75 0.28 1.74

35
40 1278 2.99 7.28 4.02

17.14
15.00 24.65 25.08 3.85 43.30

SECOND
THIRD SECOND FIRST EIGHTH SECOND

LINT COTTON

2.06

18.84

10.09

THIRD

A Project by

Aarthi Padmanabhan Archana Sridhar Karuna Vishwanath Shweta Sukanya .C Nandhini. A Sugunya

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