Part- I

(Introduction)

What is Commodity? What is a commodity exchange? What is Commodity Futures? History of Commodity Market in India Legal framework for regulating commodity futures in India Commodities Traded International Commodity Exchanges

Cont

Part- II
Research:
Research Objective & Sub-objective Research Process

Data Interpretation & Analysis Findings & recommendation Conclusion

What is Commodity ?

Any product that can be used for commerce or an article of

commerce which is traded on an authorized commodity

exchange is known as commodity.

The article should be movable of value, something which is bought or sold and which is produced or used as the subject

or barter or sale

What is a 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.

History of Commodity Market in India

The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875, about a decade after they started in Chicago
Cotton, derivatives trading started in oilseed in Bombay (1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in Bombay (1920).

What is Commodity Futures?

A Commodity futures is 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.

Cont
Use of Commodity future?
Hedging Arbitrage

speculation

Role of Commodity Exchanges

Provide

Platforms

It enable actual users to hedge their price risk given the uncertainty of the future It provide liquidity and buoyancy to the system.

Legal framework for regulating commodity futures in India

Forward Markets Commission (FMC) National Commodities & Derivatives Exchange Limited (NCDEX)

Multi Commodity Exchange of India Limited (MCX)

National Multi Commodity Exchange of India Limited (NMCE)

Commodity Traded

Bullion (Gold KG, Silver, Brent) Minerals (Electrolytic Copper Cathode, Aluminium Ingot, Nickel Cathode, Zinc Metal Ingot, Mild steel Ingots) Oil and Oil seeds (Cotton seed, Oil cake, Crude Palm Oil, Groundnut, Groundnut expeller Oil, Cotton, Mentha oil, RBD Pamolein, RM seed oil cake, Refined soya oil, Rape seeds, Mustard seeds, Caster seed, Yellow soybean, Meal) Pulses (Urad, Yellow peas, Chana, Tur, Masoor) Grain (Wheat, Indian Pusa Basmati Rice, Indian parboiled Rice (IR36/IR-64), Indian Rice , Barley, Yellow red maize)

Cont

Spices (Jeera, Turmeric, Pepper) Plantation (Cashew, Coffee Arabica, Coffee Robusta) Fibers and other (Guar Gum, Guar seeds, Guar, Jute sacking bags, Indian

28 mm cotton, Indian 31mm cotton, Lemon, Grain Bold, Medium Staple,

Mulberry, Green Cottons, , , Potato, Raw Jute, Mulberry raw Silk, V-797 Kapas, Sugar, Chilli LCA334 ) Energy (Crude Oil, Furnace oil )

International Commodity Exchanges

.

The New York Mercantile Exchange (NYMEX) London Metal Exchange The Chicago Board of Trade Tokyo Commodity Exchange (TOCOM) Chicago Mercantile Exchange

 Research Methodology

Objective:

To understand Farmers awareness about commodity market.

Sub-objective:

TO identify, Whether Farmers are ready to make aware themselves for Commodity Trading. Especially for those Commodities which they plant (Sow).

Cont
I. Research Process

1. Identification of problems Latent Difficulty 2. Choice of research design Descriptive research design 3. Determining source of data Primary source of data

4. Designing data collection forms

Personal survey

Cont
QUESTIONNAIRE (Questions Used in Questionnaire)
Close end questions:Open end questions:-

Dichotomous questions. Multiple choice questions. Rating scale.

Completely unstructured questions

5.Determining sampling design and sample size

Sampling Design: Random Sampling Sampling Size: Palanpur). 200 Sample Taken from APMC markets (Unjha, Patan, Visnagar,

6. Organizing and conducting the field survey

Interviewing. Supervising of field work.

 Data Analysis & Interpretation

1. How did you come to know about Commodity Trading?
N.o 1 2 3 4 Options Through friends Through Commissiom Agent Through Brokers Through Mass Media Percentage 23 % 34 % 38 % 05 %

Source from which, know about commodity market

5%

Through friends
23% 38% Through Commissiom Agent Through Brokers

34%
Through Mass Media

Cont

2. Why are you not trading in Commodity market?

N.o 1 2 3 Options Lack of awareness about Trading Lack of resource Lack of proper guidance Percentage 34 % 54 % 12 %

Reason For not Trading in Commodity

12% 34% Lack of awareness about Trading Lack of resource 54% Lack of proper guidance

Cont

3. In Which Commodity You are Trading?

N.o 1 2 3 4 5 Commodity Jeera Castor Cotton Gold & Silver Others Respondent s 54 30 14 94 06 Percentage 28 % 15 % 07 % 47 % 03 %

Commodity Traded
3%

28%

Jeera Castor Cotton

47% 15% 7%

Gold & Silver Others

Cont

4. What is Basic Purpose behind Trading?

N.o 1 2 3 Purpose Hedging Arbitrage Spectulation Respondent s 26 08 166 Percentage 13 % 04 % 83 %

Purpose For Trading

13% 4%
Hedging Arbitrage Spectulation

83%

FINDINGS & RECOMMENDATIONS

Findings
Only 19% farmers do trading in commodity. Farmers prefer bullion & Agriculture commodity product for trading. Reason For not involved in Commodity Market : lack of awareness about trading & lack of resources. Generally, Farmers traded in commodity market for speculation. Only 11% farmers do hedging to overcome with price fluctuation of their crops

Recommendation:
Commodity exchanges should increase the awareness about the commodity market by educational program at the rural area and try to inform farmer about possible hedging & arbitrage game for their crops.

 Conclusion

Poor ratio of farmers are involve in commodity market because of lack of resources, proper guidance, and lack of awareness about trading.

Hedging is best suitable strategy for farmer, even if few farmers follow this strategy to prevent price fluctuation for their crop in future.

Others are just like speculator and trade in commodity just for speculation or to
earn short term profit.