Professional Documents
Culture Documents
MBA 326
Session 1-2 dtd 06.07.12 Faculty-Bandana Chadha ; bchadha@amity.edu
Learning Objectives
Know which countries dominate world trade in various commodities Know how Commodity Trading works.
Terminologies, Functioning & Mechanism of Indian & Global Commodity Exchanges in Spot & Derivatives segment. Learning to identify & mitigate commodity risks. Manage international Commodity supply & trade.
Session Plan
Module I: (1- 5 session; 5 session) Intro to Intl Commodity Markets, Trading & Worlds Top commodity producing, exporting & importing countries.
Module II: (6-10 session ; 5 sessions) Worlds Commodity Exchanges History, Contract specifications, Volumes, Products & terminologies.
Module III: (11-16 ; 6 sessions) Indian Commodity Exchanges Mechanism of commodity trading in NCDEX.
Session Plan
Mid-Term Session 17 Module IV: (Session 18-22 ; 5 sessions) Derivatives Exchanges & Operation Futures & Options Hedging-Speculative & Arbitrage strategies
Group Presentation Session 23-26
Topics
1. Cotton 2. Rapeseed 3. Soybean 4. Sugar 5. Tea 6. Coffee 7. Wheat 8. Rice 9. Rubber 10. Gold 11. Silver 12. Crude Oil 13. Coal 14. Iron & Steel 15. Guar 16. Corn
Content 1. Total World Trade 2. World Exporters/Importers 3. Total trade in India 4. Position in Commodity Trade 5. World Production 6. Producing countries 7. Country position in world trade 8. Avg./max. price fluctuation 9. How is it produced/extracted 10.Yield per hectre/acre 11.Various forms/Variety 12.Cropping/growth pattern
cont..
Content
13.Annual rainfall, temp, sunshine, harvesting 14.Global Demand & Supply 15.Supply dynamics 16.Major world Trading centres 17.Major Trading centres in India 18.Price-makers 19.Consumption patter-worldwide/India 20.Influences on Demand/Supply 21.Govt. Policy 22.Competition from substitutes 23.Price trends & factors influencing prices 24.Trade Policy in India
Session Plan
Module V: (Session 27-29 ; 3 sessions) Worlds Most Traded Commodity markets, Warehousing, Physical settlement, Ports & Logistics, Review
Final Test 2 (Session 30)
Weightage
10
Date Planned
31st Aug
Niti Nandini Chatnani, Commodity Markets Operations, Instruments and Application, Tata McGraw Hill Education Private Limited, New Delhi NSE Certificate in Financial Markets (NCFM) Study material on Commodities Markets Module
http://www.nseindia.com/education/content/module_ncfm.htm
Reference Books
NCDEX Institute of Commodity Markets & Research (NICR), Study Manual for Commodity Trading
Reliance on digital technology. In 2011: 5.6 bill cell phone users (80% world pop)
2.3 bill internet users (33% of world pop)
Source : http://en.wikipedia.org/wiki/List_of_countries_by_number_of_mobile_phones_in_use
Source: http://www.internetworldstats.com/top20.htm
Intl Business in
st 21
Century
Telecom & Transportation Advancement Integration of Europe Union Globalization Terrorism Protectionism, distortions & barriers to free trade Business Ethics Intellectual Property- copyright, trademark &
patent infringement
CSR
Financial Markets
Markets/organizations that facilitate: Raising of funds or Investment of assets or Trading of financial securities/instruments e.g. Stocks, Bonds, Treasury Bills, Commodities Hedging of various risks Types:
1. 2. 3. 4.
Financial Markets
1. Capital Markets Stock/Equity investments.
2. Debt Markets Borrowers & lenders for a specific period. e.g. T-Bills, Bonds & Securities 3. Forex Market facilitate intl trade & global investment.
4. Commodity Markets Markets where raw or primary products are exchanged. They are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts through Futures & Options. Banks are the largest financial institutions which participate in all the financial markets.
What is a Commodity ? Primary product of standardized and consistent quality that can be traded on international markets Often substances that come out of the earth Maintain roughly a universal price Fungible i.e. equivalent no matter who produces Fluctuate daily based on global supply and demand No aspect of product differentiation or perceived quality such as brands
What is a Commodity ? Well-established physical commodities have actively traded Spot & Derivative markets.
Generally, these are basic resources and classified as : Grains Wheat, corn, rice, oats, soybean Soft Sugar, coffee, cotton, lumber, orange juice Precious metals - gold, silver, platinum Hard - Mined metals, copper, iron ore, tin, aluminium Energy - Electricity, gas, coal and oil Meat Pork bellies, lean hogs & live cattle
What is SPOT & Derivatives Mkt. Every transaction has three components: 1. Trading - A buyer & seller come together, negotiate and arrive at a price. 2. Clearing - involves finding out the net outstanding i.e. exactly how much of goods & money the two should exchange. e.g. A buys goods worth Rs.100 from B & sells goods worth Rs. 50 to B. On a net basis, A has to pay Rs. 50 to B. 3. Settlement - the actual process of exchanging money & goods.
Commodity Exchange? Is an exchange where various commodities & derivatives products are traded. Organized Trade in contracts based on agricultural products and other raw materials (wheat, barley, sugar, maize,
cotton, cocoa, coffee, oil, gold, natural gas, metals etc.)
Contracts are standardized (quality, quantity, delivery month, terms) Contracts for Spot, Futures & Options. Regulator Commodity Futures Trading Commission in U.S. ; Forward Markets Commission in India ; Securities and Commodities Authority in UAE.
Gold Trading
Traded as a valuable asset even before Christ
The London market, since 1919, set the price for gold daily around the world and was the standard/basis for gold contracts Trade was interrupted due to World War II, because participating governments used gold to support their military operations. Was reopened in 1954.
London market continues to be the standard or basis for gold contracts.Prices are published at 10:30 a.m. and 3 p.m. Daily GMT.