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Why trade in Commodity?
Commodities Derivative market has emerged as a new avenue for investors to create wealth. Today, Commodities have evolved as the next best option after stocks and bonds for diversifying the portfolio. Based on the fundamentals of demand and supply, Commodities form a separate asset class offering investors, arbitrageurs and speculators immense potential to earn returns.
Commodity futures serves as an ideal hedging platform for farmers, physical traders and corporate who are exposed to price risk arising out of volatility in commodity prices. It also becomes an investment avenue for retail customers by providing several products with different and non-correlated cycles.
The Inditrade Edge
Inditrade aims to harness the immense potential of the Commodities market by providing you a simple yet effective interface, research and knowledge. We provide user friendly online trading platform to trade in various commodity sectors like bullion, base metals, energy and agriculture.
Inditrade provides broking services in commodity sector with membership of all three major exchanges. With our strong branch network, research support and technology edge; facilitate investors, traders and hedgers to trade in futures market. We provide a for MCX & NCDEX with BSE & NSE
Top quality Research
  • In house research on more than 25 commodities
  • Highly skilled Analysts with professional industry experience
  • Daily, Weekly and Monthly Research Reports
Pro-active Relationship Management
  • Active advisory desk
  • Efficient & nationwide network
  • Seminars, workshops and investment camps for investors
Technology
  • Single screen customized Market-Watch for MCX and NCDEX along with NSE/ BSE
  • Real-time commodity information and ledger position
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. It has been a highly sought-after precious metal for coinage, jewelry, and other arts since the beginning of recorded history. The metal occurs as nuggets or grains in rocks, in veins and in alluvial deposits. Gold is dense, soft, shiny and the most malleable and ductile pure metal known. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Gold is one of the coinage metals and has served as a symbol of wealth and a store of value throughout history. Gold standards have provided a basis for monetary policies. It also has been linked to a variety of symbolisms and ideologies.
India is the world's largest consumer of gold, as Indians buy about 25% of the world's gold purchasing approximately 800 tones of gold every year. India is also the largest importer of the yellow metal; in 2008, India imported around 400 tones of gold. Whereas, Since the 1880s, South Africa has been the source for a large proportion of the world's gold supply, with about 50% of all gold ever produced having come from South Africa. In 2007 China (with 276 tones) overtook South Africa as the world's largest gold producer, the first time since 1905 that South Africa has not been the largest.
Factors Influencing Prices
  • Gold prices are mainly influenced by macro-economic factors like strength of the economy, emerging markets, currency fluctuations interest rates etc.
  • Supply and demand factors also important in the determination of prices, with rising investment interest in the metal.
  • Gold reserves held by different central banks and shifts in the holdings through central bank sales influence prices of gold.
  • Since gold is considered safe haven, the metal is also bought during economic and political unrests.
  • Since India is a major consumer of the metal, demand from the country also affects prices of the metal significantly.
Global Exchanges
  • OTC markets at London (LBMA), New York and Zurich.
  • Gold derivative exchanges at New York – CME (COMEX), Tokyo (TOCOM), and Mumbai (MCX)
Crude oil
Petroleum, also called crude oil, is a thick and black liquid. It consists mainly of hydrocarbons and is mainly found in the Middle East, North America, and Russia. It is the most important world energy source. It supplies 38% of the world's energy at present. Petroleum can be separated into less complex but more useful mixtures by fractional distillation. The process is called oil refining. Petroleum can be easily transported by pipeline. Treated petroleum can be used as fuels; mainly gasoline (petrol) for cars, Diesel fuel for Diesel engines used in trucks, trains and ships, kerosene fuel for jets and as lubricants.
Types Of crude oil
  • West Texas Intermediate (WTI), a very high-quality, sweet, light oil delivered at Cushing, Oklahoma for North American oil
  • Brent Blend, comprising 15 oils from fields in the Brent and Ninian systems in the East Shetland Basin of the North Sea. The oil is landed at Sullom Voe terminal in the Shetlands. Oil production from Europe, Africa and Middle Eastern oil flowing West tends to be priced off this oil, which forms a benchmark
  • Dubai-Oman, used as benchmark for Middle East sour crude oil flowing to the Asia-Pacific region
  • Tapis (from Malaysia, used as a reference for light Far East oil)
  • Minas (from Indonesia, used as a reference for heavy Far East oil)
  • The OPEC Reference Basket, a weighted average of oil blends from various OPEC (The Organization of the Petroleum Exporting Countries) countries
Production
The top three oil producing countries are Saudi Arabia, Russia, and the United States. About 80% of the world's readily accessible reserves are located in the Middle East, with 62.5% coming from the Arab 5: Saudi Arabia, UAE, Iraq, Qatar and Kuwait. A large portion of the world's total oil exists as unconventional sources, such as bitumen in Canada and Venezuela and oil shale. While significant volumes of oil are extracted from oil sands, particularly in Canada.
OPEC stands for 'Organization of Petroleum Exporting Countries'. It is an organization of eleven developing countries that are heavily dependent on oil revenues as their main source of income. The current Members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. OPEC controls almost 40 percent of the world's crude oil and it accounts for about 75 per cent of the worlds proven oil reserves. Its exports represent 55 per cent of the oil traded internationally.
Consumption
Oil accounts for a large percentage of the world's energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions' consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone, though by 2007 this had dropped to 21% of world oil consumed.
In the US, in the states of Arizona, California, Hawaii, Nevada, Oregon and Washington, the Western States Petroleum Association (WSPA) represents companies responsible for producing, distributing, refining, transporting and marketing petroleum. This non-profit trade association was founded in 1907, and is the oldest petroleum trade association in the United States
Factors influencing prices
  • Supply and consumption of the commodity influences its prices significantly since crude oil used extensively in a vast array of activities around the world.
  • Political unrests mainly attributed to major oil producing and exporting countries are also influential to crude oil prices.
  • Stock flows at warehouses, refinery hazards, weather conditions and fund buying are other factors which share the ability to move crude oil prices.
Copper
Copper is one of the most widely used metals by man and has been the paraphernalia and the harbinger of civilization and development. The chemical and physical properties of the metal have made it the popular choice of man in an array of domestic industrial and technological applications. Copper is corrosion resistant, malleable, ductile and an excellent conductor of electricity and heat. Copper when mixed with other metals such as zinc, nickel, aluminum, tin etc adopts different characteristics and is used in highly specialized applications. It can even be said that a significant part of societal infrastructure is based on the red metal.
Copper is renowned for its ability to conduct heat and electricity and is the best non-precious conductor of electricity as it faces much less resistance compared to other metals. Copper is used for power cables and its immense strength and ability to defend against corrosion makes the metal ideal for commercial and residential building wiring. The metal is a major component for energy efficient generators, motors, transformers and renewable energy production systems.
Global refined production of copper amounts to 15 million tones, with China holding the position of the largest producer of the metal producing 21 percent of the world total. Chile follows China with a 17 percent share followed by Japan, USA and Russia with 8%, 7% and 5% respectively.
China also tops the list of consumer with it eating out 29% of the global share. USA stands behind China with an 11% global share, followed by Germany, Japan and Russia with 8%, 6% and 4% of global share respectively.
Factors influencing prices
  • Mine development and production of the metal
  • Strikes and production outages at mines and production facilities
  • Global economic cycles. Economic development can result in infrastructural development, industrial development etc where the metal is used extensively.
  • Growth in construction, automobile, electrical industries.
Agriculture commodities
Agriculture commodities are broadly classified into food grains, pulses, edible oil seeds, spices and minor commodities.
Pepper
  • Pepper is important spice crop mostly cultivated in Kerala, Karnataka and Tamil Nadu and harvested during December - March.
  • India produces about 50000 tonnes of pepper annually and 10000-15000 tonne per year.
  • World’s production ranges at 2.71 - 3.35 lakhs tons per year and Vietnam, India, Brazil and Indonesia are other major producers.
  • Prices of domestic pepper are largely influenced by global prices especially of Vietnam, Brazil and Indonesia and demand in western countries.
  • Kochi, Allepey, Chickmangalur are the major domestic spot markets.
  • Global production for 2010 estimated lower at 1.2 lakh tonnes, while Indian output estimated at 38000 tonnes, down by nearly 25 percent from last year.
  • Daily price movement depends on arrivals at Kochi, price quoted by Vietnam, Brazil and Indonesia, weather factors in Kerala.
  • Supply of pepper is price elastic as it can be stored for long period (2-3 years) and farmers tend to hold for better price.
Chana
  • Chana or Bengal Gram or Chick pea is a largest pulse crop in India and contribute 40% to total domestic pulses output. It is cultivated in Rabi season (winter crop) and grown across India except north-east states.
  • It is grown in Rabi season (September – March) across India. Sowing start early in southern states and arrivals start coming in the markets by December end.
  • Major producing states are Madhya Pradesh (40-45%), Maharashtra (10-15%), Andhra Pradesh (7-8%), Rajasthan (8-10%) and Karnataka (6-8%)/
  • India produces about 65-70 lakh tonnes every year and consume most of the produce domestically.
  • India has banned export of pulses including chana in 2007 after sharp rise in prices, while it allowed export of kabuli chana in 2008.
  • Despite being largest producer, India imports about 2-3 lakh tonnes of chana annually to meet the domestic demand.
  • Price of chana is influenced by weather during winter season, area, yield, production and arrivals pattern.
  • Chana output had hit record high of 74 lakh tonnes in 2009-10, which pressurized the prices to touch Rs2000 levels across major spot markets.
Rubber
  • Rubber is plantation crop and harvested throughout the year, but peak season is Nov-Feb.
  • Kerala is biggest producer with 95 percent of domestic output, while Thailand, Indonesia, Malaysia, India, China and Vietnam are the major producers.
  • Global output is about 98.76 lakh thousand tonnes, while India produces around 8-9 lakh tonnes per year.
  • World rubber output is expected to increase to 95.4 lakh tonnes during 2010-2011, while Indian output may increase to 8.85 lakh tonnes.
  • India’s natural rubber consumption is estimated to grow by 20% this financial year where as the annual production growth fetched only 5%
  • Rubber consumption normally comes from tyre manufacturers and automobile accessories.
  • Domestic prices are mostly influenced world crude oil prices, consumption by China and India, supply from Thailand and Malaysia.
  • Daily price movement in the exchanges depends on Tokyo futures, weekly export/import/stocks of Thailand, Malaysia and China.
  • Rubber prices were on bull-run in the past few months and made all time high of Rs17500 in domestic markets.

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