NAME: BLESSING AZUKA CLASS: S.S.

1D DEFINITION OF COMMODITY EXCHANGE Commodity Exchange Open and organized marketplace where ownership titles to standardized quantities or volumes of certain commodities (at a specified price and to be delivered on a specified date) are traded by its members !lthough samples of the commodities are physically examined and graded" physical delivery of the commodity rarely occurs because the delivery contracts are usually exchanged or closed out (traded out) before their expiration date Commodity exchanges are divided roughly into three main types# metals exchanges" fuels exchanges" and soft (agricultural) commodity exchanges Other exchanges deal in currencies and commodity indices !lso called commodity futures market or commodity market Commodity futures markets acquiesce bartering producers and bartering consumers to annual the accident of adverse approaching amount movements in the bolt that they are affairs or buying $n ad%ustment to plan a futures arrangement accept to be standardised &hey accept to accept a accepted admeasurement and grade" expire on a assertive date and accept a preset beat size 'or example" blah futures trading at the Chicago (oard of (arter are for )*** bushels with a minimum beat admeasurement of +,-cent,bushel (.+/ )*,contract) !n agriculturalist may accept a acreage of blah and in ad%ustment to barrier ad%oin the achievability of blah prices bottomward afore the autumn he ability advertise blah futures 0e has bound in the accepted price" if blah prices abatement he makes a accumulation from the futures affairs to annual the accident on the absolute corn On the added hand" a customer such as 1ellogg may buy blah futures in ad%ustment to assure ad%oin a acceleration in the amount of corn

$n ad%ustment to facilitate a aqueous bazaar so that producers and consumers can advisedly buy and advertise affairs " exchanges animate speculators &he speculators cold is to accomplish a accumulation from demography on the accident of amount aberration that the bartering users do not want &he rewards for speculators can be absolute ample absolutely because there is a abundant accident of loss DISADVANTAGES OF COMMODITY EXCHANGE 1. High pric !"#$%i#i%& c"'#( # $( %" )$rgi* c$##+ ! margin call is when the market is going against your position and additional capital is required !t this time" additional margin will be deducted from your account balance $f there are insufficient funds in your account" your broker will notify you of the additional amount that is required $f these additional funds are not promptly deposited into the trader2s account" their positions will be automatically liquidated by the broker ,. -ri*cip$# i+ *"% g'$r$*% (

3ike trading stocks" there is no guarantee of your initial investment 0owever" in buying stock in a company" your loss is limited to the amount you paid for the stock $n commodity futures trading" losses can mount to a greater amount then your initial margin used to open the position and additional capital through margin calls may be necessary if the market goes against your position .. High ri+/ (' %" # ! r$g !s written on the benefits page" using leverage only requires a small amount of initial capital to initiate a new position and price volatility can lead to big profits or big losses &hat is why many people suggest using stop orders to limit potential losses

ADVANTAGES OF COMMODITY EXCHANGE 1. C$* 0'& 1g" #"*g2 "r + ## 1g" +h"r%2 c"))"(i%& 3'%'r + c"*%r$c%+ Commodity future2s trading allows the trader to either buy or sell the contract $f the trader thinks the price of the commodity will go up" they buy the contract and hope to sell it back in the future at a higher price for a profit Conversely" a trader who thinks the price of the commodity will decrease can sell the contract and buy it back later hopefully for a profit ,. C$* %r$( 4i%h $ +)$## $)"'*% "3 c$pi%$# 4ince commodity trading utilizes leverage" it is possible to trade without a lot of upfront capital !dditionally" there is no interest charged for the use of leverage as there is for margin trading in stocks .. V"#$%i#i%& i* +") )$r/ %+ "33 r+ p"% *%i$# 3"r 5'ic/ pr"3i%+ 4ome contracts on &OCO5 such as platinum" gasoline and kerosene offer large price fluctuations at times &his makes for a dynamic market where quick profits can be made EXAM-LES OF COMMODITY EXCHANGE 6recious 5etals" (ase 5etals" !gricultural" Energy" Coffee" 7ubber" 4teel" Emissions" !gricultural" 8iamonds" 6ower" 9atural :as" Emissions" Coal" !gricultural" 5etals" E&Cs" Commodities $ndex Commodities exchanges across the world A3ric$ E6ch$*g A00r !i$%i"* L"c$%i"* -r"('c% T&p + !frica 5ercantile !gricultural" !f5; 9airobi" 1enya Exchange Energy 9airobi Coffee 9CE 9airobi" 1enya Coffee Exchange Ethiopia Commodity !ddis !baba" EC; !gricultural Exchange Ethiopia
3

E!4& !frica Exchange E!; 7wanda</= !gricultural Commodity !CE Exchange for !frica<>= !uction 0olding !0C; Commodity Exchange<-= 5ercantile Exchange of 5E; 5adagascar<)= (ourse !frica (previously :(O&)<?=<@= 4outh !frican 'utures Exchange (part of A4E A4E 3imited) 5akola !gricuturals <B= Exchange !bu%a 4ecurities and !4CE Commodity Exchange

1igali" 7wanda 3ilongwe" 5alawi

!gricultural

3ilongwe" 5alawi !gricultural !ntananarivo" !gricultural" 5adagascar 5etals" Energy Ebene City" 5etals" 'orex 5auritius 4andton" !frica 4outh !gricultural !lternative !gricultural !gricultural products

!ccra" :hana !bu%a" 9igeria