COMMODITIES What is a commodity: Commodity is some good for which there is demand, but which is supplied without qualitative

differentiation across a market. it is fungible i.e. the same matter who produces it. Eg: petroleum, notebookpapers, milk or copper, electricity.gold. Commodities exchange in India: A commodity exchange is a place where various commodities and derivatives are brought and sold. Commodities exchanges usually trade on commodity futures. Reasons for trading in Commodity derivatives: Hedging: Commodities are subject to constant and extreme price fluctuations. Traders are the worst sufferers of the price risk. Forward contracts have come to their rescue. A forward contract requires a buyer and a seller to take and make a delivery of a definite quantity of a particular commodity at a future specified Hedging lessens risk since it involves the purchase or sale of a commodity with the intention of counterbalancing the profit or loss of another investment. Speculating: Speculators are people who are prepared to bear risks in anticipation of earning profits. Markets are granted liquidity by speculators and it is hard to conceive of a futures market devoid of speculators.

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Arbitrage: Thus, traders can profit from arbitrage opportunities occurring due to price differences between two exchanges. Shifting of Risk: The minute a trader finalizes a deal and secures a price, he is no longer concerned by unfavourable price shifts. For example, if a seller trades a specific contract for $ 450 and soon after the price comes down to $440, there has been an unfavourable price shift but the seller has made a profit of $10. At this point, the risk has been transferred to the buyer of the contract. Speculators trade on commodities and derivatives by undertaking risks in order to maximize profits. Information: Exchanges produce huge volumes of data that are intensely scrutinized and monitored by a wide cross-section of people as the data provides gainful insights about the prevailing economic conditions. Commodities types and profiles: The different types of commodities that are available to trade are:
1) 2) 3) 4) 5)

Grain Energy Metals Softs Live stocks

Grains:
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The grain commodities are very active during the spring and summer.
• • • •

Corn Soybeans Wheat Rough rice

Energy: Fuelling and heating the country, the energy commodities allow you to take advantage of everything from rising gas prices to supply disruptions in the Gulf of Mexico.
• • • •

Crude oil Heating oil Unleaded oil Natural gas

Metals: The metal commodities allow you to speculate on the price of precious metals or fluctuations in the prices of industrial metals.
• • •

Gold Silver Copper

Softs: The softs markets cover many of the food and fibre commodities. They are often consider exotic, as many of these commodities are predominately grown in other regions of the world.
• • • • • •

Cotton Cocoa Coffee Sugar Lumber Orange juice

Livestock:
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First Commodity Exchange of India Ltd. The East India Cotton Association. The East India Jute & Hessian Exchange Ltd. The Rajkot Seeds oil & Bullion Merchants` Association Ltd 4..Pork bellies are probably the most recognized among the livestock commodities. Kochi 10. The Central India Commercial Exchange Ltd. Esugarindia Limited 4 . Mumbai 14. The Bombay Commodity Exchange Ltd. Bangalore 19.. The Kanpur Commodity Exchange Ltd. Beef and pork are staples in most diets and these commodities offer some of the most reliable trending patterns.. Ltd. 2. Bhatinda Om & Oil Exchange Ltd. • • Live cattle Lean hogs List of commodity Exchanges in India 1. Vijay Beopar Chamber Ltd. 7. Kanpur 5. Mumbai 3. 8.. Batinda. Kochi 17. Ahmedabad Commodity Exchange Ltd.. Meerut 6. 16. Delhi 11. India Pepper & Spice Trade Association.... Gwalior 15. The Spices and Oilseeds Exchange Ltd. The Coffee Futures Exchange India Ltd. Bikaner 18. Indore 12. National Board of Trade. Muzaffarnagar 9. The Meerut Agro Commodities Exchange Co. The Chamber Of Commerce. Hapur 13. Rajdhani Oils and Oilseeds Exchange Ltd. Bikaner Commodity Exchange Ltd.

E-Commodities Ltd Of these 25 commodities exchanges the MCX. It is similar to the way “stocks” and “equities” are used when investors talk about the stock market. Small speculators: individual commodity traders who trade on their own accounts or through commodities broker. gold. Like mutual fund in the stock market. Hissar 25. Commercials: The entities involved in the production. Commodity trading: The terms “commodities” and “futures” are often used to describe commodity trading or futures trading. commercials account for most of the trading in commodity markets. National Multi Commodity Exchange of India Limited 21. NCDEX and NMCEIL are the major Commodity Exchanges. Futures are contracts of commodities that are traded at a futures exchange like the Chicago Board of Trade (CBOT). large speculators have money managers that make investments decisions for the investors as a whole. Large speculators: A group of investors that pool their money together to reduce risk and increase gain. Both small and large speculators are known for their ability to shake up the commodities market. processing or merchandising of a commodity. For example both the corn farmer and Kellogg’s from the example above are commercials. Players Involved in Commodities Trading: There are three different types of players in the commodity markets: 1. 2. Multi Commodity Exchange of India Ltd 23. soybeans. To be more specific. Surendranagar Cotton oil & Oilseeds Association Ltd 22. etc. Futures contracts have expanded beyond just commodities.. 3. How to Start Trading Commodities: 5 . National Commodity & Derivatives Exchange Ltd 24.20. We can think of them as generic terms to describe the markets. crude oil. this is what they really mean: Commodities are the actual physical goods like corn. Haryana Commodities Ltd.

the prices of commodities can change on a weekly or even daily basis. Just like the price of bananas at the grocery store. We will also discuss many of the caution signs you want to be aware of with a broker. Commodities future: Commodities futures. and they use a lot of strange terms. Finding a commodity broker: Before you can begin trading commodities. you should educate yourself on the futures contract specifications for each commodity and of course learn about trading strategies. market price. and sell it to the buyer at the higher. because he can buy the commodity at the lower market price. This section covers what you need to know before you hire a commodity broker and what you should expect from a good broker. Keeping up with the latest futures news and reading research from commodity analysts will be very beneficial to commodity trading. the buyer of the futures contract makes money. The difference with commodities is that they are highly leveraged and they trade in contract sizes instead of shares. Instead. or by providing another contract at the market price.In order to trade commodities. because he gets the product at the lower. they can fulfil the contract by delivering proof that the product is at the warehouse. If the price goes up. agreed-upon price and can now sell it at the higher. If the price goes down. As you can easily see. so I won’t try to explain more. agreed-upon price. Research commodities: Research is a major function of trading commodities. are an agreement to buy or sell a commodity at a specific date in the future at a specific price. so rest assured that you don’t have to take delivery of a truckload of soybeans. very few people would do it. you will need to find a good commodity broker. The important things to know are: 6 . or futures contracts. If commodities traders had to actually deliver the product. Commodities have the same premise as any other investment – you want to buy low and sell high. the seller makes money. The main techniques we can use to research commodities and future markets are fundamental analysis and technical analysis. Remember that you can buy and sell positions whenever the markets are open. it can get very complicated very fast. by paying the cash difference.

the commodities prices will change dramatically. but they are actually just futures markets. the easier it is to get in an out of a market at the truest price .less slippage. • The values are set by commodities traders and analysts who spend all day everyday researching their particular comodity. The E-mini S&P 500 and Eurodollars markets are among the highest volume future markets. Actively traded commodity: Liquidity is very important to active commodity traders. but we will just concentrate on commodities for these ranking. The forecast are also based on today’s informatio. since they are traded on open market. but the individual investor doesn’t really need to be concerned with them. • They are future contracts they also forecast the value of the commodity into the future. so the North Korea suddenly tests a nuclear weapon. Many other agricultural products such as pork bellies and wheat are traded. These can give you a single number that takes into account the broad spectrum of commodities futures that are occurring at any given time. Commodities with high volume are the often the choice for day traders and many large traders. The financial futures are sometimes lumped in with comodities.• Commodities futures. so we can totally trust their estimation. • Best way to either invest in or monitor commodities futures is through a commodities index or commodities fund. The most commonly reviewed commodities are oil and gold. such as the gsci. Low volume commodity markets are often prone to wild price swings. The higher the volume of a futures contract on a commodity. How Does Commodities Trading Affect the US Economy? 7 . do a great job of accurately assessing the price of each commodity.this means they are very good at it.

• There is no true consumption of gold in the economic sense. COMODITIES AT MCX: The products of mcx are bullions.S economy. silverHNI .Commodity trading impacts the economy by making public the analysts forecasts of future prices of the most important market goods. • Economic forces that determine the price of gold are different from. a commodity. as well as geopolitical considerations. and in many cases opposed to the forces that influence most financial assets. whether. metals. • Although gold mine production is relatively inelastic. oil and oil seeds. Indian Gold Market 8 . plantations. an investment and simply an object of beauty. pulses. fiber. gold guinea.silverM. As traders take into account all information regarding oil supply and demand. spices and others. metals and oil and oil seeds will have more increase rate. It is these assumptions behind oil prices that affect the economy so significantly. • Its stabilities and high value makes it virtually indestructible and ensures that it is almost always recovered and recycled. Among all of these bullions. one of the most widely watched commodities is oil.goldm. Gold: Gold is the oldest precious metal known to man and thousands of years it has been valued as a global currency. goldHNI . which has an impact on every good and service produced in the U. The price of oil changes daily. Bullions: In bullions they will be gold. pulses. cereals. and this helps to stabilise gold price. this affects oil prices. For example. energy. silver. platinum. recycled gold (or scrap) ensures there is a potential source of easily traded supply when needed. MAJOR CHARACTERISTICS OF GOLD: • Gold is unique as it is both a commodity and monetary assets. as the stock of gold remains essentially constant while ownership shifts from one party to another.

at around 2-3 tonnes a year.750 tonnes of gold every year. which is around 9% of the total global gold stocks. This reduced the disparity between international and domestic prices of gold from 57 percent during 1986 to 1991 to 8. • The global prices are driven by a host of factors with macro-economic factors like strength of the economy. Indian jewellery off take is sensitive to price increases and even more so to volatility. Market moving factors: • Indian gold prices are highly correlated with international prices. the sharp price increase in 2008 and 2009 has impacted demand with total demand in 2008 dipping to 660 tonnes. At present. • Domestic consumption is dictated by monsoon. • As India's domestic primary production of gold is very less. the fluctuations in the INR-US Dollar impact domestic gold prices and have to be closely followed. currency movements. However. making them into standard bars.5 tonnes in the same period of the previous year. However. rising importance of emerging markets. • Facilities for refining. harvest and marriage season. • India's gold demand is firmly embedded in cultural and religious traditions. the country imports most of its domestic requirement. interest rates being major influencing factors. • However. purchasing around 700 .• India is the world's largest consumer of gold.5 percent in 2001. It is also valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits. as compared to the rest of the world. assaying. • Gold hoarding tendency is well engrained in the Indian society and unofficial stocks held by Indians is estimated to be well above 15. coins in India. Indians normally buy about 25 per cent of the worlds gold. India is also the largest importer of the yellow metal and has averaged imports of around 600 tonnes a year. 13 banks are active in the import of gold. 9 . It is further expected to shrink in 2009 with demand in first three quarters of 2009 totalling only around 265 tonnes against 553. • Thus.000 tonnes. • In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. are insignificant. 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. both qualitatively and quantitatively.

10 . amid rising global investor demand and almost stable supplies. demand and consequently prices to some extent are influenced by seasonal factors like marriages. but in the opposite direction." Furthermore he recently said on Dutch television that we can only hope and pray for a smooth economic transition in the US." Former ECB president Wim Duisenberg. • The investment in gold is influenced by comparative returns from other markets like stock markets. real estate other commodities like crude oil. • Domestically. the US dollar will be heading south. As long as foreigners are willing to pour in the amount of $2 billion dollars every working day. gold is still a monetary asset and trades like a currency. No matter how you look at the US twin deficits and America's future fiscal liabilities. The rural demand is influenced by monsoon. Why is this so important? Simple. But if foreign confidence were to wane. Facotor affecting gold: There are three factors affecting the gold: • Weak us dollar • Growth in demand for jewellery • Increase in demand for exchange traded paperback products. recently said: "A dollar devaluation seems inevitable due to the tremendous US Current Account deficit. this problem is huge and some painful adjustments not only seem to be necessary but unavoidable as well. It should be obvious that one of these major painful adjustments will be a massive devaluation of the US dollar. the US dollar is the key driver for Gold. Robert McTeer recently said: "over time. It seems that the idea of a dollar devaluation is gaining support from the Fed when the President of the Dallas Fed. quoted by Spanish Newspaper El Pais. Gold is the anti-dollar with a high inverse correlation to the dollar! In the end. there is only one direction for the dollar to go . agricultural output and health of the rural economy. the dollar won't crash.• Supply-demand is a major influencer. as the dollar goes. whenever such reports surface. so will gold.lower. • Shifts in official gold reserves. reports of sales/purchases by central banks act as major price influencing factors. Weak US Dollar: Projections about a declining dollar due to an ever-increasing twin deficit supported by many investment veterans are met by much denial from politicians as well as from investors.

is also one of the markets where public taste in gold jewellery is enjoying a renaissance. 11 . the price of gold is ultimately driven by supply and demand Unlike most other commodities. gold can be purchased like any listed stock at select stock exchanges of the world like London Stock Exchange. There were sharp falls in demand in Turkey and Taiwan . Italy. Australian Stock Exchange (Gold Bullion Securities) and New York Stock Exchange (Street Tracks Gold). The demand for consumption of gold in jewellery was 6% higher at 735 tonnes and also comprised a new first-quarter record. China. The earthquake in India. has led to restocking by retailers. because most of the gold ever mined still exists in accessible form and is potentially able to come on to the market for the right price. The World Gold Council initiated Electronic Traded Funds have displayed very good performance and growth in volumes since launch. This was due to economic difficulties and continued weakness in investment demand. in turn. hoarding (saving) and disposal plays a much bigger role in affecting the price. There are three factors influencing gold • • • Bank failures Low or negative interest rates War. which accounts for 10 % of world gold demand. invasion. which are primarily responsible for this growth. is unlikely to hit demand significantly as it occurred in an area which comprises only 5% of the total Indian consumption. The US.down 38% and 31% respectively. like all investments and commodities. Countries.Growth in Demand for Jewellery: In spite of the convergence of Diamond and Palladium. Factors influencing the gold price: Today. a market that showed a 19% increase in demand. the demand for gold jewellery has seen a regular growth year on year. Increase in demand for exchange traded paper backed products: For the first time in history. Turkey and the USA. The Indian market – the world’s largest for gold demand – was 23 % higher following the marriage and festival period which. looting. crisis. The renewed interest in gold also extends to Japan. however. are India.

the demand for gold rises. copper. looting. If people feared their bank would fail. while around 73 percent comes as a by-product of gold. a bank run might have been the result. An example of this is the period of stagflation that occurred during the 1970s and which led to an economic bubble forming in precious metal. • Demand for silver is built on three main pillars. the first. 205 and 259 million ounces respectively in 2002. photography and Jewellery & silverware accounting for 342. leading president rosevellet to impose a national emergency and to outlaw the ownership of gold by US citizens. War. They see gold as a solid asset. The third largest is Australia. people fear that their assets may be seized and that the currency may become worthless. 12 . second and fourth largest producing countries. This is what happened in the USA during the great depression of the 1930s. industrial uses. as world mine production is more a function of the prices of other metals. Thus in times of great uncertainty. invasion. most people preferred to carry around paper bank notes rather than the somewhat heavier and less divisible gold coins. Low or negative real interest rates: If the return on bonds. • Primary mines produce about 27 percent of world silver. lead. However. • Just over half of mined silver comes from Mexico. despite it being classed as a precious metal. crisis: In times of national crisis. which will always buy food or transportation. both were regarded as money. Silver: General characteristics: Silver's unique properties make it a very useful 'Industrial • Commodity'. Peru and United States. respectively.Bank failures: When dollars were fully convertible into gold. and zinc mining. • The price of silver is not only a function of its primary output but more a function of the price of other metals also. particularly when war is feared. equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases.

Factors Affecting the Price of Silver: There are various factors that affect the price of Silver. • Non-duty paid silver for the export sector rose sharply in 2002. Soon after the price fell back down due to the New York Mercantile Exchange and the intervention of the Federal Reserve. up by close to 200% year-on-year to 150 tons. ranking alongside Industrial giants like Japan and the United States. Also. In 1997 Warren Buffet purchased 130 million troy ounces of silver. • In India silver price volatility is also an important determinant of silver demand as it is for gold. India is still one of the largest users of silver in the world. • Economically viable primary silver mine is a function of the world silver price level. In spite of this fall. Indian Scenario: • Silver imports into India for domestic consumption in 2002 was 3. • Open General License (OGL) imports are the only significant source of supply to the Indian market. As of April '08 the iShares Silver Trust held 180 million troy ounces of silver as reserves.45 per troy ounce. Some of those factors are: Private and Institutional Investors. plating of Jewellery and silverware and jari. • By contrast with United States and Japan. 13 . in April of '06 is hares launches a silver exchange traded fund which is called the iShares Silver Trust.579 tons in 2001. Australia and Dubai. CIS. They bought enough to cause the spike in 1980 to $49. Indian industrial off take for fabrication in hardcore industrial applications like electronics and brazing alloys accounts for only 15 % and the rest being for foils for use in the decorative covering of food. • Often a faster growth in demand against supply leads to drop in stocks with government and investors. • Around 50% of India's silver requirements last year were met through imports of Chinese silver and other important sources of supply being UK. From 1973 the Hunt Brothers began to corner the market.540 tons in 2001.400 tons down 25 % from record 4. • Indian industrial demand in 2002 is estimated at 1375 tons down by 13 % from 1.• The tie between silver and economic activity is strong. given that around two-thirds of total silver fabrication is in the industrial and photographic sectors. the large concentrated short position and Industrial demand.

On 2008-09-25 the CFTC relented and probed the silver market after persistent complaints of foul play 14 . is also the custodian of the SLV silver ETF. According to Ted Butler. JP Morgan Chase. 2006.0 (gold also peaked in 1980. which shows that the four or fewer largest traders are holding 90% of all short silver contracts. Buffet announced to shareholders that his company no longer held any silver. • In April 2006 i shares launched a silver exchange traded fund called the iShares Silver Trust (NYSE:SLV). one of these banks with large silver shorts. This is the equivalent to 140 days of production.45 per troy ounce and a reduction of the gold/silver ratio down to 1:17. Industrial Demand is one of the major factors that influence the price of silver. as close scrutiny of Comex documents reveals that ETF shares may be used to 'cover' Comex physical metal deliveries. 95% of annual silver consumption comes from the three main areas of industrial uses. it is the most plentiful and least expensive of the precious metals. helping to cause a spike in 1980 of $49. and photography. at $850 per troy ounce) In the last nine months of 1979. the brothers were estimated to be holding over 100 million troy ounces of silver and several large silver futures contract However. which is equivalent to 140 days of production. Factors influencing the silver: Private and institutional investors: • From 1973 the hunt brothers began cornering the market in silver. Furthermore. The total between these traders is equal to a total short of 245 million troy ounces.000 metric tons) of silver at approximately $4. these four or fewer traders were short a total of 245 million troy ounces (as of April 2007). Although silver is relatively scarce. This leads analysts to speculate that some stores of silver have multiple claims upon them. Some silver analysis has pointed to a potential conflict of interest.50 per troy ounce (total value $585 million). warren buffet purchased 130 million troy ounces (4. silverware. As of April '07 it shows that the four or fewer largest traders are holding 90% of all short silver contracts.The large concentrated Short Positions in silver also contribute to the price. jewellery. a combination of changed trading rules on the new York merchantable exchange (NYMEX) and the intervention of the federal reserve put an end to the game. • In 1997. On May 6. which as of April 2008 held 180 million troy ounces of silver as reserves. The large concentrated short position: The CFTC publishes weekly commitments of trader’s report.

67 17. New applications for silver are being explored in batteries.91 1.3 56.06 4.8 66.29 0.6 97.6 22. Even so.65 0.63 16. which may further increase non-investment demand.4 94.3 38.1 15 .0 37.64 0.95 7031 14.3 65. due to the advent of digital cameras the enormous reduction in the use of silver halide-based photographic film has tended to offset this.4 60. superconductors and microcircuits. The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial usage. Comparison between gold and silver rates: YEAR 1840 1900 1920 1940 1960 1970 1980 1990 2000 2005 2009 2010 SILVER PRICE Yearly cum avg 1.44 GOLDPRICE Yearly cum avg 20 20 20 30 35 35 612 383 279 444 972 1135 GOLD/SILVER RATIO 15.39 4.Industrial demand: The use of silver in items such as electrical appliances and medical products has increased since 2001.55 31.9 31.34 0.

• India accounts for 2/3rd of the world's chickpea production.5-2.23 million tons. Australia.85 million tons).5 million tons.5-0. Rajasthan (0.7 million tons). • Chana is a rabbi crop and is sown from Nov to December and harvested from Feb to March.5 million tons) and Maharashtra (0. The major country from where India imports chickpeas is Canada. chana production is 5. Iran and Myanmar.7-0. Uttar Pradesh (0.Desi and Kabuli.comparision between gold and silver 8000 7000 6000 5000 4000 3000 GOLD/SILVER RATIO 2000 1000 0 1 2 3 4 5 6 7 year 8 9 10 11 12 13 YEAR SILVER PRICE Yearly cum avg GOLDPRICE Yearly cum avg Pulses: In pulses they will be chana. A Desi chickpea is the main type grown in India. • The major producing states are Madhya Pradesh (1. • India's chana production fluctuates between 4-7 million tons and is normally 40% of India's total pulse production of 12-15 million tons India's chana production in 2003-04. The peak arrival period begins from March-April at the major trading centres of the country.33 million tons out of a total pulse production of 15. Chana: Chana belongs to leguminasae family and there are two main types . India imports around 3-4 lakh tons of chickpeas annually.5-2. 16 .

• Indian chana markets are highly fragmented. Rice fine such as 1121 sela and steam declined by Rs 300/400 to Rs 3700/3800 and Rs 4900/5000 per quintal on heavy selling by stockists. Canada. viz. Sriganaganagar. • Jaipur. Weak export demand also eased fine rice. yellow peas etc also influence the prices of chana. There is high substitutability between pulses in India among the consumers. • Jalgaon. Past data of pulses: The Delhi grains and pulses market held sustained supplies and lack of buying interest. Imports and the crop situation in the countries from where imports originate. Major Trading Centers: • Indore. Other major centers are Delhi. The sentiments of traders play a significant role currently. Australia. Akola in Maharashtra. So the price of the other major pulses like tur. wholesale traders. The major players in the value chain are commission agents. though wholesale prices have come down significantly. Interestingly. Kanpur. Hapur. While urad (black matpe) dipped Rs 200 to Rs 5040/5050 per quintal on weak 17 . Hyderabad. However the production highly fluctuates between years. wholesalers (dal) and retail outlets. Bhopal. Softening of wheat also pulled down wheat flour by Rs 5/10 per 50 kg bag amid increased offerings by roller-flour mills. as a consequence of the lack of free flow of information. stockists. Sangrur. Vijayawada. Hanumangarh in Rajasthan. Kota. Ludhiana. Sirsa. Mill-quality wheat edged down by Rs 18/20 to Rs 1120/1124 per quintal as daily arrivals stood higher at 28000-30000 bags. dal mills. Market Influencing Factors: • • • • • Chana can withstand moisture stress to a certain extent. Gulbarga. The information flow between these participants is restricted and very slow. Mumbai. Pulses also witnessed easing trend. Latur. Myanmar. Wheat procurement for central pool has so far reached 240 lakh tonne. Jodhpur. depending on the rains received and the moisture availability in the soil. Vidisha in Madhya Pradesh. Stocks present with stockiest and the stocks to consumption ratio. retail prices of atta are quoting is quoting as high as 160/170 per 10 kg bag. brokers. Jalandhar. Chennai. Bikaner. with very long value chain.

copper. lead. mild steel ignot. Import and export policies by the Indian Govt. tin. Production and trends of other pulses namely Urad and Tur in domestic and international markets and price of Yellow Pea. prices later steadied on pause in selling. Overview: The demand for chana is getting more and the farmers are also not eilling to sell at lower prices on anticipation of some recovery during June-august. Huge stocks of chana in the spot markets may restrict major rise in prices in medium. zinc. nickle. Tur (pigeon pea) maruti quality slumped from Rs 4800 to Rs 4600 per quintal on the back of sustained supplies of tur kachri (with 17-20 per cent damaged grains) from MP and Bihar. stockists and retailers Production in the International markets. Lalitpur and Jhansi pulled down masoor bold from Rs 3550/3850 to Rs 3450/3750 per quintal. Discouraging advices from masoor (lentil) producing centres such as Kota. Rajmash chitra edged down by Rs 50/75 with flat grain rajmash quoting at Rs 3850/3875 per quintal amid increased offerings by stockists. and billets. According to market men. Gram on the spot market tumbled by Rs 100 to Rs 2090/2100 per quintal on stockists’ selling. 18 . However. Indore. gram on the spot market largely followed the weak futures market trend. Low quality tur was priced as low as 3800/4000 per quintal. So huge stocks of chana in the spot markets may restrict major rise in prices in medium term. Tur dal patka declined by Rs 300 to Rs 6000/6100 per quintal on stockists’ selling. Bundi. Gram end week improved by Rs 15/20 as its prices in the futures market edged up by Rs 20/25 to Rs 2097/2098 per quintal. Factors affecting the chana: • • • • • • Rainfall pattern and temperature Total area covered Arrivals in the markets Demand from millers. Moong (green gram) fell Rs 200/250 to Rs 6600/6750 per quintal following increased arrivals from West Bengal and Madhya Pradesh.Mumbai advices. Metals: They will be aluminium. Baran. Kabuli gram bucked the easing trend and closed firm on upcountry demand. urad dal too drifted lower by Rs 200/300 per quintal with prices at the high end quoting at Rs 7600/7900 per quintal.

without becoming brittle like carbon steels. Brazil. • It is estimated at about 3037 million tonnes for all categories of bauxite (proved.000 tonnes. Norway. common atmosphere gases and a wide range of liquids. Its density is only one third that of steel. Canada. which is an advantage in structures under shock roads. India's annual export of aluminums is about 82. probable and possible). • Aluminum is light. Aluminum is resistant to weather. South Africa.7 and 28. • The global production of aluminum is about 27. the situation is not only self-sufficient. China. • The largest aluminum markets are North America. and therefore finds more decorative uses. West Indies. 2. In nature however it only exists in very stable combinations with other materials (particularly as silicates and oxides) and it was not untill1808 that is existence was first established. It is easily worked and formed. Supply and Demand: Global Scenario: • Aluminum ore. most commonly bauxite. the European Union. Australia.1. but it also has export potential on a competitive basis. South America and Australia. 19 . Aluminum has high elasticity. 3. • In terms of demand and supply. Venezuela. • Aluminum keeps its toughness down to very low temperatures. the identified reserves would have an estimated life of over 350 years. together they represent more than 90 percent of the world primary aluminum production. Europe and East Asia. India and New Zealand. Russia. With the present level of consumption of aluminum.5 million tons of aluminum in year 2004 respectively.64 and 2. aluminum has a high reflectivity.5 per cent of the total deposits and installed capacity is about 3 per cent of the world.Aluminum: Characteristics of aluminum: • Aluminum is the third most abundant element in the earth crust. is plentiful and occurs mainly in tropical and sub-tropical areas .9 million tons in 2003 and 2004 respectively. Canada and United States produced about 6. • China. Russia. India's reserves are estimated to be 7.Africa. There are also some deposits in Europe • The leading producing countries include the United States.6. Indian Scenario: • India is considered the fifth largest producer of aluminum in the world. the Gulf States (Bahrain and United Arab Emirates).

South America. With the takeover of INDAL by the HINDALCO. to 9. has been diluted in favor of private sector. The reduction of aluminium from its oxide. the Caribbean and Africa. which is then smelted to produce aluminium.8 lakh tones by 2007. shfe and nymex are the important international markets that provide direction to the aluminum prices. NALCO. To produce one tonne of primary aluminium takes two tonnes of alumina. aluminium demand is set to accelerate sharply. is very power-intensive. whether it be hydro-electric power in Canada or near the oil and gas fields in the Middle East.5 million tonnes in 1970. to 15 million tonnes in 1990 and is expected to rise to 23 million tonnes in Supply Production of primary aluminium is done in three stages. in terms of aluminum production. hence why significant parts of world primary aluminum production are located near cheap energy sources. • About a decade back. it has emerged as the major producer of aluminum in the country. Government monopoly. Interestingly. on competitive terms. a reddish-brown aluminous earth found in tropical latitudes in Australia. with the rapid industrialisation and urbanisation of countries like China and India. The ownership pattern in private sector has undergone changes.• India’s annual consumption of Aluminum is around 6. which in turn takes four tonnes of bauxite. Bauxite is then refined to produce alumina. when OPEC limited oil exports in the Middle East in the 1970's. the primary Indian aluminum producers were BALCO. HINDALCO and MALCO. Primary aluminium demand has risen from 2 million tonnes in 1950. however. INDAL. which could then be exported. Instead they converted the oil and gas to electricity and produced aluminium. which they were not allowed to export. World aluminum markets: Lme. alumina. India. tocom. It starts with the mining of bauxite. India has emerged as a net exporter of aluminum.18 lakh tons and is projected to increase to 7. Of the five. two (BALCO and NALCO) were in the public sector while the other three were in the private sector As a result of the process of liberalization of trade in aluminum. A very clever way to get around the 20 . With all aspects of its use likely to benefit from continuing growth in the developed economies aluminium has a stable outlook. oil-producing countries found themselves with surplus oil production capacity. Demand With some many applications it is of little surprise that aluminium has rapidly become the largest base metal in terms of tonnage consumed annually. removal of price and distribution control over aluminum.

To produce one tonne of aluminium from scrap consumes only 5% of the amount of electricity that it takes to produce one tonne of primary aluminium. To produce aluminium from scrap aluminium costs a fraction of the cost of producing primary aluminium. Compared with the production of metals. so at peak energy usage times. Factors affecting supply The production of aluminium requires alumina and uninterrupted supply of electricity. aluminium smelters sometimes have to cut production. such as during the summer when air conditioning consumers huge amounts of energy. lack of rainfall in North America restricted hydro-electrical output and in turn this forced aluminium producers to cut back aluminium production. More recently. which have affected supply. China's growth spurt has left it short of power capacity. in recent years there have been a host of issues. The cutbacks were enough to turn the aluminium price around. but to do so takes the of equivalent to about 5% of all the electricity consumed in South Africa. Recycled aluminium plays an important part of the supply chain as aluminium's use in packaging often has a short life span. It is important to understand the huge energy requirement need to make primary aluminium. The Hillside smelter in South Africa produces around 460. Most of these have been to do with electricity. Likewise. 21 . it led to higher aluminium prices. However. energy shortages in the US sent electricity prices spirallying higher to the extent that it was more profitable for some aluminium smelters to stop producing aluminium and to sell their electricity quotas to other users. These are a few of the factors that can impact the aluminium market. In the 2001. aluminium's requirements are fairly straightforward.000 tpy of aluminium.OPEC restrictions. to free-up electricity for other users. Back in the mid-1990's. hurricane damage in the Caribbean in 2004 affected alumina production and as this threatened alumna supply to the smelters.

3%). It is a product whose fortunes directly reflect the state of the world's economy.6 billion tons of copper. which provide direction to the copper prices 22 . • The largest international sources for scrap are the United States and Europe. • Land-based resources are estimated at 1. As society's need for copper increases. Growth in the building construction and automobile sector would keep demand of copper high. China. Germany and Philippines are the major importers. new mines and plants are introduced and existing ones expanded. Japan (14%). and China (5. World copper markets: • Lme and nymex are the two international markets. India is emerging as net exporter of copper from the status of net importer on account of rise in production by three companies. Two major states owned telecommunications service providers. Indian Scenario: The size of Indian Copper Industry is around 4 lakh tons. the United States (19.5%). Copper goes into various usages such as Building. • The major copper-consuming nations are Western Europe (28. • The global production of refined copper is around 15 million tons. Birla Copper. Supply and Demand: Global Scenario: • Economic. Canada and Australia are the major exporters and Japan. BSNL and MTNL consume 10% of country's copper production. Chile. • Copper and copper alloy scrap composes a significant share of the world's supply. Spain. technological and societal factors influence the supply and demand of copper.Copper: Copper ranks third in world metal consumption after steel and aluminum. Automobiles etc.7 billion tons. which as percentage of world copper market is 3 %. Sterilite Industries are two major private producers and Hindustan Copper Ltd the public sector producers. and resources in deep-sea nodules are estimated at 0. Cabling for power and telecommunications.1%). Indonesia.

• The eight leading refining nations viz us. With some many widespread uses it is not surprising copper demand keeps growing and now with China. chile. copper demand grew from 500. India. India and many other developing countries starting to industrialise and urbanise. the ore is processed by one of two methods. beligum. SXEW for short. take for example the closurse of the Bourgainville mine in Papua New Guinea and the decimation of production in Zambia. 88%. comes from primary production. japan.000 tonnes. Copper sulphide ore is first concentrated then smelted and then refined. Whereas copper oxide ore is crushed and the copper is then extracted from the crushed ore by disolving the copper in acid and the collecting the copper from the acid via electrolysis. copper suphides or copper oxides. Factors affecting copper prices: The wide production base means there are numberous factors that can affect production and therefore prices. demand is likely to grow from strength to strength. and the federal republic of germeny account for 67% of total refined metal production. production is often affected by labour unrest. that new copper that is mined from the ground. zambie. Canada.000. In North and South America. Secondary supply comes from recycling copper scrap. SXEW accounts for some 15% of primary copper production.this is a huge indicator of whatliseaheadforcopperdemand. Demand Between 1900 and 2000. Today copper supply is made up from two sources. North America consumers around 10kg per capita and Europe around 9kg per capita. in parts of Asia and Africa production can be affected by political unrest. Japan consumes around 12kg per capita. Chart 2 shows the geographical distribution of primary supply. Eastern Europe and South America are all consuming less than 2kg per capita . the majority. This process is called Solvent extraction-electrowinning.000 tonnes to around 13. In 23 . which generally come in two forms. Depending on the type of ore mined. each of these stages is a separate process and can be carried out at a different location. The large populations of China. with growth accelerating since the 1950's. but of growing importance is secondary supply which accounts for 12% of total refined copper supply. Supply Copper is not a particularly rare metal and it is produced in many countries. Per capita demand for copper rises as GDP per capita rises. Primary supply involves mining copper ores.

These price fluctuations generate risk and opportunity to different participants in the market and the metal exchanges around the world provide the means for all those involved with the market to either hedge their risk or take on risk as an investor/speculator Factors Influencing Copper Markets • Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day. • Growth and development in the Building. requires endless environmental permissions and needs extensive infrastructure as well. it takes enormous financing. Early uses of lead included building materials. With such a large and diverse market it is little surprise that copper's fundamentals are continuously changing and as they do. and malleable bluegrey metal that has been used for at least 5. pigments for glazing ceramics.addition. ships. All these factors make it hard for the market to balance supply and demand. • World copper mine production through exploration of new mine and expansion of existing mine. and aircraft depend on such batteries for start-up. in some cases. electronics and electrical industry Lead: Characteristics of lead: Lead is a very corrosion-resistant. It is widely used in hospitals to block X-ray and gamma radiation and is employed to shield 24 . The copper prices changes constantly as the market attempts to balance supply and demand at any given time.000 years. batteries provide the actual motive power. • Economic growth of the major consuming countries such as China. with floods and droughts either hitting the production process or the transport of raw materials. and. schools. ductile. Germany etc. It is also for soundproofing in office buildings. Japan. New production also takes years to commission. dense. and hotels. The electrical systems of vehicles. as the scale of mining is large. and pipes for transporting water. so does the price. weather is an important factor affecting supply. Today's major use of lead is in lead-acid storage batteries.

Different grades of steel are produced by adjusting the chemical composition and by slight variations in the different stages of steelmaking process. infrastructure. ships. the Republic of Korea and Australia: 54%. oxygen etc. Mild Steel Ingots: Major characteristics: • Steel is an alloy consisting mostly of iron.). chromium. Due to increasing use of lead in domestic market both players are expanding their smelting capacities for lead.000 tonnes in 2004. • The major suppliers for the imports were China. • Steel is one of the most common materials in the world and is a major component in buildings. which necessitates large-scale imports and recycling. china. • Lead demand in India was estimated at 150. silicon. 25 .eu and India are the major consumers of lead. with varying amounts of other elements like carbon. Due to huge gap in demand-supply. India imported nearly about 50% of its domestic demand. there are more than 3000 catalogued grades of steel available. Currently. tools. • The domestic industry is characterized by the presence of only a few players in the primary segment.000 tonnes for 2004. Lead in the global market is traded as soft lead. Supply is controlled by Australia and china. automobiles. The primary lead industry in India is divided between the following main players: Binani Industries Limited and Sterlite Industries (India) Ltd. mostly from secondary sources. • The main constraint in lead production in the country is the lack of lead ore reserves. . animated lead. lead alloys and copper-base scrap. 15% and 10% respectively. manganese. japan. Supply & Demand Scenario: Domestic Scenario: • Lead production equalled approximately 82. World Scenario: • • • Usa. (Hindustan Zinc Ltd.against nuclear radiation both in permanent installations and when nuclear material is being transported.

billets. as its government invests in infrastructure and transport.flat and long. Galvanised plates (GP). Further progress has been seen in the first decade of the 21st century. • The groth face in India steel industry is expected to pick pace further. pipes etc • Long Steel: Rod or a bar. It is environment friendly. Galvanised coils (GC). Global Scenario: • Global steel production grew enormously in the 20th century from a mere 28 million tonnes at the beginning of the century to 781 million tonnes at the end. which accounts for 13% of the global steel consumption is the second largest consuming sector • The main producing and consuming regions of steel have shifted from the developed world to the developing regions with Asia accounting for more than 55% of the global steel production. • Flat Steel: Plate or a (hot or cold) rolled strip product. and appliances. • The scope of raising the total consumption of steel in India is huge given that pre capita income of steel is 40% compared to 150 kgs across the world and 250 kgs in china. and the nation sees building of new factories and houses.machines. India steel production is increased anomaly by10% till 2012. US (91 million tonnes). The five largest producers of crude in 2008 are China (500 million tonnes). Japan (199 million tonnes).330 million tonnes. ingots. The sharp rise in production has lead to India becoming the fifth largest producer of steel in the world. 26 . can be recycled and requires considerably less energy to produce than some other metals. The global crude steel production in 2008 is reported to be 1. CR coils. Russia (68 million tonnes) and India (55 million tonnes) Indian Scenario: • The Indian steel industry has entered into a new development face from 2005-2006 riding high on a resurgent economy and rising demand for steel. engineering products. with a 2008 crude steel production of above 55 million tonnes. Cars. • Steel market is primarily divided into two categories . Construction industry accounts for around 50% of the global steel consumption. • Steel consumption of a country increases when its economy is growing. Typical rod products are the reinforcing rods made from sponge iron for concrete. Typical products are plates. HR sheets. gears tools etc. HR coils. CR sheets.

) (Hindi name: Jau). Batteries etc. Cereals: Barley: General characteristics: • Barley (Hordeum vulgare L. which represents over 65% of total world production. automobile and automobile components. It is cultivated as a summer crop in temperate areas and as a winter crop in tropical areas. wheat and maize. • About 65 per cent of nickel is used in manufacture of stainless steels. followed by Australia. electrical and electronics. a cereal grain derived from an annual grass is the fourth most important cereal crop in the world after rice. packaging. often for highly specialized industrial.74 lakh tons. New Caledonia and Indonesia. Consumption centers are Japan 2 lakh tons and European Union 3. Indian nickel market: • Nickel market in India is of total import dependent • India imports around 30000 of nickel • Import duty on nickel is 15% With the growth in the stainless steel sector nickel import demand is expected to increase in the coming years. Canada. Supply and Demand: • Major producers of Nickel are Russia. 27 . aerospace and military applications.Nickel: Characteristics of nickel: • Nickel finds its usage in various industries such as engineering. • Rapid expansion of global stainless steel production is fuelling demand for primary nickel. and 20 per cent in other steel and non-ferrous including "super" alloys. • Among base metals Nickel is the most volatile owing to its strong demand and tight supply. • Barley is very adaptable and is a widely grown crop. • World primary nickel consumption is about 1 million tons. infrastructure.

Russia. The global trade in barley is reported to be around 17-18 million tonnes. Global scenario: • The annual global barley production has been in the range of 130-140 million tonnes in the recent years. Russia (2-3 million tonnes). The EU accounts for approximately 42% of the world's malt production. this is no more the case now. • India's annual production of Barley has been steadily around 1.Barley has a short growing season and is also relatively drought tolerant. 18. 10.5 million tonnes.54 million tonnes.5 million tonnes) and Japan (1-1. 6. While. 10. 4-5 million tonnes respectively in the recent years. Australia (2-3) and EU-27 (2-3 million tonnes) being the major global exporters. with average production in these regions being around 55. Turkey and USA are the major producers of barley accounting for around 75% of the total global production. It is estimated that around 94% of global malt production is used for making beer. human food and barley malt. historically. 6.2-1. barley is the second largest coarse cereal traded globally. Currently food and industrial consumption of barley is more prominent. The total average production of all-coarse in the recent year has been around 1000 million tones.5 million tonnes in the recent years. in 2008-2009 it is estimated to have risen sharply to 158 million tonnes. The area under cultivation has also 28 . Japan and China import it for both feed and malt production The global malt production is estimated to be around 22 million tonnes. it is a tender grain and care has to be taken in all stages of its growth and harvest. with Ukraine (4-5 million tonnes). with sowing being undertaken from October to December and harvesting from March to May. Following corn. China (1-1. However. Saudi Arabia imports barley mainly for feed. While. However. • Barley is used as livestock feed. livestock consumed most of barley produced globally. The major importing nations are Saudi Arabia (6-8 million tonnes). Ukraine. Australia. Canada. with production in 2008-09 estimated to be around 1. • European Union. Indian Scenario: • Barley is cultivated as a rabbi crop in India. more than 90% of which is produced from barley.

• Different variety of wheat is grown in the world maily they are three types are used in modern food production are: soft wheat.000 tonnes respectively. 68 and 63.000 tonnes and 25. Some cultivation is also undertaken in Bihar. Uttar Pradesh (34%). hard wheat and triticam compactum. with a per hectare yield of around 1944 kg. • India's barley production is projected to increase to around 2 million tonnes in a couple of years to meet the rising demand for barley malt. with 2008-09 production in these regions being 151. The three largst markets are kota. 78. to direct human consumption barley is utilized by the beer industry. China. and Uttaranchal.8 lakh hectares. • Wheat is globally an important source of starch . • Latest state wise data available is that of 2005-06 from the Ministry of Agriculture. Global scenario: • The annual global wheat production has been in the range of 600-630 tonnes in the recent years. • In addition. 112. But it gives a fair picture of land use for the crop of barley. • EU-27. 29 . Madhya Pradesh (8%). Haryana (6%) and Punjab (5%). food processing industry and feed manufacturing industry in India. The major producers of Barley in the country are Rajasthan (40%). glutan.stabilized at around 0. Annual demand from beer and feed industry is estimated to be around 60. However.7-0. USA and Russia are the five major producers of wheat accounting for close to 70% of the total global production. It is repotedly grown as early as 9000bc and now it is grown in all parts of the country. Himachal Pradesh. Major Indian trading centers: The major markets are located in rajasthan and Madhya pradesh. Wheat: General characteristics: • Wheat is one of the most three-cereal crops along with maize and rice. India. in 2008-09 it is estimated to have risen sharply to 689 million tonnes.5.ramganj mandi and baran in rajasthan.6.8 million tonnes respectively. The combined production of all cereals in 2008-09 is estimated to be 2525 million tonnes.

12 million tonnes) are major exporters. The major importing regions are Middle-east Asia. as the cereal is very important for the country's food security. Australia (8-18 million tonnes) and Argentina (6 . the procurement has been around 15-20%. Algeria are the most important importing nations. 30 . • Green revolution and increased focus by Government on wheat has helped wheat production to surge sharply from around 6 million tonnes at time of independence to current levels. Haryana (13%). South-east Asia and North-west Africa. agencies have been recently procuring close to 25-30% of annual production. The Central Govt. EU-27 (15-25 million tonnes).• Wheat is the most important cereal traded in the world market. which too has supported the rise in output over the years. • While US (25 . As govt. Historically. • India's annual production of wheat has been around 75-79 million tonnes from 2006-07.35 million tonnes). The global trade in wheat during 2008-09 was sharply up at around 140 million tonnes in 2008-09 from an average of around 110 . Rajasthan (10%) and Madhya Pradesh (10%) are the main wheat producing states of India. • Government plays a major role in the wheat value chain in India. Close to 90% of the area under wheat is irrigated. However. • Wheat is cultivated as a rabbi crop in India. Indonesia. which sets the mood for the upcoming season. • Uttar Pradesh (34%). open market prices too do not generally fall below this price.6 million tonnes. Canada (15-20 million tonnes). • Wheat crops around the world have their own unique production cycles of planting and harvest timeframes. Wheat accounts for around 30-35% of India's total food grain production of around 220 million tonnes.115 million tonnes in the recent previous years. with sowing being undertaken from October to December and harvesting from March to May. sets the Minimum Support Price (MSP) every year. Brazil. Punjab (20%). The official marketing season of wheat in India is assumed to commence from April. India's annual wheat consumption is estimated to be around 72 million tonnes currently. with production in 2008-09 estimated to be around 78. there are a large number of countries importing wheat with maximum demand emanating from developing nations. due to low productivity it is only the third largest producer after EU-27 and China. Indian scenario: • India has the largest area in the world under wheat cultivation. Egypt.

8 660.1 931.3 915.5 491.1 515. south African futures exchanges.4 755.Important world wheat markets: • Derivatives exchanges.0 0 3 6 5 0 677.7 899. which acquired Chicago board of trade.2 981.9 575.0 533.1 825.zhenghzhou commodity exchanges.2 644.0 5 0 5 0 0 3 1 0 1 5 8 0 564.7 580.9 622. 2500 2000 Series1 1500 Series2 Series3 1000 Series4 Series5 Series6 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Year Jan 2010 2009 2008 2007 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 543.9 632.3 560. mcx ncdex.7 491.2 911. • Us fob and eu (france) fob prices determine the physical prices .8 5 4 3 3 5 8 5 6 0 0 1 8 833.6 957.6 494.6 624.1 545. Kansas city board trade.3 593.5 862.4 666.1 676.0 569.Chicago mercantile exchange.5 507.8 617.9 608.5 702.7 31 .

gasoline.6 million bbl/d) and Japan (5. • Almost all industries including agriculture are dependent on oil in one way are other. paints. perfumes. electricity monthly & weekly.4 million bbl/d) are the top oil consuming countries. and it contains only about 0. • United States (20 million bbl/d). Its api gravity is 39. are largely and directly affected by the oil prices. 32 . • The world consumes about 76 million bbl/day of oil. of which OPEC was 112 billion tones. Oil & lubricants. petrochemicals. • Balance recoverable reserve was estimated at about 142. Oil and gas account for about 60 per cent of the total world's primary energy consumption. natural gas. although on daily basis the pricing relationships between these can very gratly • Brent crude oil stands as a benchmark for Europe. Crude oil: General characteristics: • Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground reservoirs.7 billion tones (in 2002). etc.24 % of sulphur. transportation.0 0 5 0 0 5 Energy: Atf. • Wti is generally priced at about a $2-4 per barrel premium to opec basket price and about 4 1-2 per barrel premium to Brent. • The prices of crude are highly volatile. heating oil. followed by China (5. High oil prices lead to inflation that in turn increases input costs. pesticides and insecticides.6 degrees (making it a “light” crude oil). crude oil. Categories of crude oil: • West Texas intermediate (wti) crude oil is of very high quality. important thermal coal. Global Scenario: • Oil accounts for 40 per cent of the world's total energy demand. reduces non-oil demand and lower investment in net oil importing countries.

. the countries total oil consumption is abot 2. Now crude price is having a high correlation with the international market price. as domestic oil production is unlikely to keep pace with demand. Exchanges in crude futures: • The New York mercantile exchange. • Oil accounts for about 30 percent of Indians total energy consumption. Krishna-Godavari and Cauvery basins. Cambay. India imports about 70 per cent of its total oil consumption and it makes no exports.2 million barrels per day. Upper Assam. • Disinvestments/restructuring of public sector units and complete deregulation of Indian retail petroleum products sector is under way. As on date.10% keeping in line with international crude price. • The oil reserves of the country (about 5. • India faces a large supply deficit. India's rough production was only 0. subject to certain government laid down norms/ formulae. • India had a total of 2. • Balance recoverable reserve was about 733 million tones (in 2003) of which offshore was 394 million tones and on shore was 339 million tones. • The international petroleum exchange of London • The Tokyo commodity exchange. 33 . • Indian government in 2002 officially ended the Administered Pricing Mechanism (APM).8 million barrels per day.Indian scenario: • India ranks among the top 10 largest oil-consuming countries. an activity restricted earlier to state owned entities.4 billion barrels) are located primarily in Mumbai High.1 million barrels per day in refining capacity • Government has permitted foreign participation in oil exploration. even the prices of crude biproducts are allowed to vary +/.

99 59.04 69.90 71.83 69.36 84.90 74.23 80. It is also used in off-highway utility vans.70 65.59 85.34 121. primarily used as a fuel in internal combustion engines.53 79.29 76.12 119. farm machinery and in other spark ignition engines employed in a variety of service applications.27 82. It is primarily used as fuel for passenger cars.18 97.70 69.56 91.56 103.22 2007 60.34 75.60 65.70 89.58 67.27 81.76 67.17 2009 64.35 61.54 77.18 82.56 88.92 109.83 67.Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 82.11 63. 34 .64 137.79 2008 86.25 70.77 75.76 160 140 120 100 80 60 40 20 0 Year 2010 2009 2008 2007 Gasoline: Major Characteristics: • Gasoline (America) or MoGas or petrol (Commonwealth nations) is petroleum derived liquid mixture.68 135.91 82.53 83.

India is largely a diesel based economy.700 kilo barrels per calendar day. Indian scenario: • The growth of the Indian economy. This was over 9 million barrels a day in 2007. India's consumption of gasoline in 2008-09 is estimated to be 82. Some mixtures also contain significant quantities of ethanol as a partial alternative fuel. gasoline production accounted for above 23% of the total production of refinery products in 2007. Global scenario: • The world demand for gasoline is estimated to be an average 20 million barrels a day. • Gasoline is derived from crude oil and its price shows high correlation with crude oil prices. Japan (5.9 million barrels a day in 2008. ranging from c4 to c11 that vary widely in chemical & physical properties and are derived from fractional distillation of crude petroleum in oil refineries with a further treatment mainly in terms of improvement of its octane rating.8%). • However. which is sharply up by 36% from 2004-05 consumption of 60.9%). the production of gasoline in any country depends on the type of economy it follows. • Global gasoline production is reported to be above 6550 million barrels in 2007. the light sweet crude oil used by US. Small quantities of various additives are common.1%). Moreover. The United States is the largest consumer with an average consumption of around 8. for purposes such as tuning engine performance or reducing harmful exhaust emissions. followed by China (8. aided by the setting up of new refineries and 35 .• Gasoline is a complex mixture of relatively volatile hydrocarbons. while US has adopted a gasoline based economy. Globally.5 million barrels. rising incomes of the country's middle class has lead to rising numbers of passenger cars and consequently increasing demand for gasoline in India since the recent 10-15 years. accounting for over 40% of global consumption. The correlation in 2008 is estimated to have been around 93%. Former Soviet Union (8. leading to more production and consumption of gasoline in US and High-Speed Diesel (HSD) in India. yields more gasoline. For eg. • India's production of gasoline has shown a sharp improvement in the previous two decades. • US is the largest refiner of crude oil holding 20% of the total world refining capacity of 87.3%) and India (4.5 million barrels in 2008-09.

exposing the exporting Indian refineries to the huge volatility in global prices. The production of gasoline has increased from 26 million barrels in 1990-91 to 117.0 174. Bharat Petroleum Corporation Ltd (BPCL). 2500 2000 1500 year 1000 500 0 m onths Year Jan 2010 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 202.7 232. Hindustan Petroleum Corporation Ltd (HPCL) and Reliance Industries Ltd (RIL).8 4 1 3 9 0 2009 116.7 212. • The majority of refineries in India are state-owned and follow a steady pricing policy as per Government regulations.5 194.3 140.Others are offering these products are tocom japan and mcx in india.4 200.7 173.7 147. with it jumping from 17.5 193.5 224.4 199. • Gasoline exports from India have grown substantially. marking a 350% increase.6 192.4 million barrels in 2008-09. Chicago merchantile exchange.2 120.9 183. The major refiners include Indian Oil Corporation Ltd (IOCL).7 189.1 million barrels in 2008-09. The RIL being a private player exports most of its production of petroleum products World gasoline markets.7 million barrels in 2005-06 to 39.increased capacity utilization.5 36 . representing an increase of 120%. which was acquired new york merchantile exchange runs the most liquid gasoline market.

3 243.0 201.4 220.9 236.5 224.1 323. The US environment Protection Agency (EPA) stipulates that diesel used for transportation cannot have sulphur more than 500 ppm (parts per million). Global scenario: • World-over.9 348. train and automobiles. approximately 12 gallons of distillate are produced from a 42-gallon barrel of crude oil. While.2500 ppm of sulphur • It is estimated that in the US. and the other 10 are diesel fuel. • As heating oil is derived from crude oil.9 196. buses.6 billion gallons. diesel powers heavy construction equipment. tractors.4 119.1 164. heating oil is not subject to such a mandate and it usually contains around 2000 .81 2 1 5 8 2 8 4 1 1 1 8 145.4 2008 2007 1 5 0 1 1 4 9 3 0 8 3 236.1 234. • The main difference between the two fuels is that heating oil is allowed to contain more sulphur than diesel fuel. which varies between US $ 4 – 14 a barrel.0 172.1 205.9 94.1 214. However.2 220. Of these 12 gallons of distillate. residences and businesses are estimated to use about 10 billion gallons of heating oil each year.6 290. less than 2 gallons are heating oil. with total consumption of residential heating oil in 2008 reported to be around 4. The US is the world's largest consumer of residential heating oil. Crude – Heating Oil crack is the margin refiners earn when they refine crude oil into various products. Diesel fuel is often priced at a stable premium to the price of heating oil as both are always produced together and are chemically similar. Of the 111 37 .2 268.4 239. heating is used in the central heating of homes and small buildings. especially heating oil.7 333.2 6 0 2 8 0 5 2 2 4 3 4 5 Heating oil: Major Characteristics: • Heating oil and Diesel are classified as distillate fuel oils and rank second behind gasoline as the most-consumed liquid fuels. trucks. • Diesel fuel requires additional processing to remove sulphur and is therefore more costly to produce than heating oil.4 294. its price shows a high correlation with crude oil prices.6 267.

The RIL being a private player exports most of its production of petroleum products. leading to more production and consumption of gasoline in US and High-Speed Diesel (HSD) in India. • The growth of the Indian economy has lead to increasing demand for energy for transportation and industry since the recent 10-15 years. For eg. aided by the setting up of new refineries and increased capacity utilization. Indian scenario: • India only produces diesel. which is designated as High Speed Diesel (HSD). • US is the largest refiner of crude oil holding 20% of the total world refining capacity of 87.4 billion gallons in 2008-09. 38 . followed by China (8. India is largely a diesel based economy. as diesel are for transportation and only a little more than 10% is used for residential heating. Bharat Petroleum Corporation Ltd (BPCL).8%).700 kilo barrels per calendar day.3 billion gallons in 1990-91 to 19. The major refiners include Indian Oil Corporation Ltd (IOCL). • However. As India is predominantly a diesel-based economy.3%) and India (4. • The majority of refineries in India are state-owned and follow a steady pricing policy as per Government regulations. • India's production of High Speed Diesel has shown a sharp improvement in the previous two decades.million households in the United States.6 billion gallons in 2005-06 to 4. • Globally. with it jumping from 2.9%). which is up by 30% from 2004-05 consumption of 12. Japan (5. while US has adopted a gasoline based economy.1%). The production of High Speed Diesel has increased from 5. the demand for diesel has been increasing at a quick pace. Hindustan Petroleum Corporation Ltd (HPCL) and Reliance Industries Ltd (RIL). • India's consumption of High Speed Diesel in 2008-09 is estimated to be 15. Former Soviet Union (8. • High Speed Diesel exports from India have grown substantially.9 billion gallons in 2008-09.2 billion gallons in 2008-09. more than three-fourths of the distillate sales. approximately 8 million use heating oil as their main heating fuel. exposing the exporting Indian refineries to the huge volatility in global prices.2 billion gallons. representing an increase of above 60%. marking a 265% increase. the production of heating oil or diesel in any country depends on the type of economy it follows.

9 5 5 9 2 6 3 3 4 7 5 9 2 154.9 6 3 9 9 9 4 8 4 3 3 7 7 39 .1 178.9 194.0 131.2 258. which has acquired New York mercantile exchange.8 175.5 138.9 207. and intercontinental exchange run heating oil derivative markets.1 198.2 384.8 260.2 208.6 150.9 295.4 223.9 173.0 209. Year Jan 2010 2009 2008 2007 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 204.3 170.1 197.World heating markets: Chicago mercantile exchange.0 304.2 201.0 187.6 189.0 141.7 197.3 219.1 1 6 7 4 1 2 2 6 1 2 9 9 256.1 230.9 319.3 319.1 187.2 221.6 387.1 179.9 128.1 265.6 361.6 198.1 169.0 9 1 5 7 1 146.

It is composed primarily of carbon along with variable quantities of other elements. • Hard coal (53%) includes bituminous coal (52%) and anthracite (1%).). • The degree of change undergone by a coal as it matures from peat to anthracite is known as coalification. with recoverable reserves in around 70 countries. Anthracite has both domestic and industrial uses. Global scenario: • Coal reserves are available in almost every country worldwide.t. Australia (325 m.) are the major global coal producers. Russia (247 m. Global proven coal reserves are estimated to last for 122 years at current production levels.). as against 42 and 60 years respectively for proven oil and gas reserves. • The total global proven reserves are estimated to be around 910 billion tonnes. Coal is extracted from the ground by mining. While lignite is largely used for power generation. either underground or in open pits.t.) and Indonesia (246 m. India (490 m. 40 . Thermal coal is used for power generation. • Low rank coals comprising of lignite or brown coal (17%) and subbituminous coal (30%) account for 47% of total global coal reserves. with USA (27%). chiefly sulphur. a fossil fuel is a readily combustible black or brownish-black sedimentary rock normally occurring in rock strata in layers or veins called coal beds.).t. China (13%).t. Coalification has an important bearing on coal's physical and chemical properties and is referred to as the 'rank' of the coal.Imported thermal coal: Characteristics: • Coal. • Global hard coal and brown coal (lignite) production is estimated at 5845 million tonnes (m. USA (1007 m. cement manufacture and by industry. • China (2761 m.t. Bituminous coal is further classified into thermal / steam coal and metallurgical / coking coal. India (10%) and Australia (9%) holding major share of the reserves. Russia (17%). sub-bituminous coal is used for electricity generation.) and 951 million tonnes in 2008 respectively. oxygen and nitrogen. Coking coal is used largely for manufacture of iron and steel. cement manufacture and has industrial applications. hydrogen.). The top three producers account for 73% of the total production.t.t.

t. alone accounts for 46% of the global hard coal consumption. Russia (86 m. Australia (76%).t.) and 951 million tonnes in 2008 respectively.t. The economic progress of the world.t.). • China (2761 m.5% of the world's electricity. The major global importers of thermal coal in 2008 Indian scenario: • Coal reserves are available in almost every country worldwide. The countries heavily dependent on coal for electricity generation include South Africa (94%). in 1990's.t. Australia (325 m. Global proven coal reserves are estimated to last for 122 years at current production levels. 41 .).t.t.). Australia (76%). alone accounts for 46% of the global hard coal consumption. • The global hard coal trade in 2008 is estimated to be around 938 m. India (10%) and Australia (9%) holding major share of the reserves. The economic progress of the world.• Global hard coal consumption is estimated at 5814 m.5% of the world's electricity. China. • Coal provides 26. China (81%).t. • The total global proven reserves are estimated to be around 910 billion tonnes.5% of global primary energy needs and generates 41.t.t.) and Indonesia (246 m.t. with recoverable reserves in around 70 countries. as against 42 and 60 years respectively for proven oil and gas reserves.t. especially in the emerging countries has lead to consumption sharply increasing by around 65% from levels of around 3500 m. The top three producers account for 73% of the total production.). in 2008.t. • Global hard coal consumption is estimated at 5814 m.t. • Coal provides 26.t.t.t.). in 2008.). China (81%). India (68%) and USA (49%). with USA (27%). The major global exporters of thermal coal in 2008 are Indonesia (173 m. China (13%).) of total hard coal production and almost 70% of total global steel production is dependent on coal.t. with total trade in thermal coal estimated to be 676 m. China. • Global hard coal and brown coal (lignite) production is estimated at 5845 million tonnes (m. especially in the emerging countries has lead to consumption sharply increasing by around 65% from levels of around 3500 m. • Steel industry is estimated to use approximately 13% (around 717 m. Russia (247 m.5% of global primary energy needs and generates 41. India (68%) and USA (49%).). Australia (115 m. in 1990's.) and Columbia (74 m..) are the major global coal producers. The countries heavily dependent on coal for electricity generation include South Africa (94%). Russia (17%). USA (1007 m. India (490 m.

t. and is created by methanogenic organisms in marshes.) of total hard coal production and almost 70% of total global steel production is dependent on coal. which is essential for global trade. World thermal coal markets are: Intercontinental exchange which offers european and south African coal contracts run the most liquid coal derivative market. Australia (115 m. pipelines are used for inland transport. The byproducts of that processing include ethane. bogs. odourless. and sometimes helium and nitrogen. • Before natural gas can be used as a fuel.). The major global importers of thermal coal in 2008. • The major difficulty in the use of natural gas is transportation and storage. However..t. It is a gas consisting primarily of methane. as special ships and separate LNG receiving terminals are required. Liquefied Natural Gas (LNG) is a proven commercial technology for transporting natural gas across oceans.) and Columbia (74 m.t.).t. While. butanes. Natural gas: Characteristics: • Natural gas is a colourless. and landfills. as methane clathrates. The major global exporters of thermal coal in 2008 are Indonesia (173 m. Global scenario: 42 . elemental sulphurs.). Natural gas is commercially produced mostly from oil fields and natural gas fields. Russia (86 m. in coal beds. environment friendly energy source. It is found associated with fossil fuels. carbon dioxide. it must undergo extensive processing to remove almost all materials other than methane.t. LNG projects are highly capital intensive in nature.t.• Steel industry is estimated to use approximately 13% (around 717 m. propane. • The global hard coal trade in 2008 is estimated to be around 938 m. with total trade in thermal coal estimated to be 676 m. it cannot be used under oceans.t. pentanes and higher molecular weight hydrocarbons.

industries consume the largest portion of natural gas. • Natural gas consumption has increased strongly over the past decade. • India has consumed around 41.4 bcm of natural gas in 2008 of which domestic production is 30. Russia. Malaysia (29 bcm). While major exporters of piped natural gas are Russia (154 bcm). reserves-to-production ratios for most regions are substantial. from current level of around 25%.• The world's proven natural gas reserves as on January 1. Germany (87 bcm) and Italy (75 bcm). Canada (100 bcm) are the major consumers. Iran (117 bcm).2 trillion cubic metre. • Globally. Russia Federation (420 billion cubic metre). Indonesia (27 bcm) and the major importers are Japan (92 bcm). South Korea (36 bcm) and Spain (30 bcm) Indian scenario: • Natural gas has gained prominence in India too as in the rest of the world over the last decade. The major exporters of CNG are Qatar (40 bcm). • The total global consumption of natural gas in 2008 is estimated to be 3018. followed by the power sector.7 billion cubic metre with the main consuming countries being US (657 bcm). The fertilizer sector in India is highly subsidized by the Government and it fixes the rate at which natural gas is provided to the fertilizer-manufacturing units. Industrial consumption is expected to be around 40% of total global consumption by 2030 as projected by Energy Information Administration.5 bcm. 2009 are estimated at 185. US (582 bcm). the reserves-to-production ratio is estimated at 63 years. Iran. the major importers are US (104 bcm).79 • The share of imports is expected to increase in the coming years and cross 30%. Worldwide. Canada (175 bcm) and Iran (116 bcm). of which almost three-quarters are located in the Middle East and Eurasia. • The total global trade in 2008 as piped natural gas and as LNG is reported to be 587. and Qatar together account for about 57% of the total reserves. despite this rising consumption.3 bcm and 226. Canada (103 bcm) and Norway (93 bcm). • Fertilizer (41%) and power (37%) are the major users of natural gas in India. World natural gas markets: 43 . • The total global production of natural gas in 2008 is estimated to be 3065.6 billion cubic metre with the main producing countries being Russia Federation (602 billion cubic metre).6 bcm and imports as lng has been 10. However.

18 6.61 10. with the increasing ratification of Kyoto Protocol (KP) by countries and rising social accountability of polluting industries in the developed nations.39 7.74 6.60 11.16 3. And.66 May 4.64 9.86 11.08 7.65 5.07 3.45 6.36 4. Year 2010 2009 2008 2007 Jan Feb Mar Apr 4.64 7.88 7.93 8.86 Jun Jul Aug Sep Oct Nov Dec 5.Chicago Mercantile Exchange (CME).30 7.18 7.47 3.71 7.59 5.93 12.42 3.60 6.29 8. the emission trading (ET) industry has come to life.63 6.25 3.51 5.28 6.19 Weather: Carbon (cre). carbon (cfi) Carbon (cer): Carbon credits a market of 21st century: With growing concerns among nations to curb pollution levels while maintaining the growth in their economic activities.01 8.04 4.82 4. The recent 44 . runs the world's most liquid natural gas derivative market.26 5. which has acquired New York Mercantile Exchange (NYMEX).36 3.19 3.86 7.19 7.21 4. the carbon emissions trading is likely to emerge as a multibillion-dollar market in global emissions trading.

The major sources of supply are Non-Annexure I countries such as India. The extension of KP shall be ratified by the current signatories of KP in their future meetings essentially to curb GHG emissions into the environment. China. etc. Canada. The potential buyers of carbon credits shall be corporates in various Annexure I countries that need to meet the compliance prevailing in their countries as per the Kyoto Protocol or those investors who would like buy the credits and with the expectation of selling them at a higher price during the KP phase (2008-12). Risk associated with carbon credits: There are market. Sources of demand and supply: Emerging carbon credit markets offer enormous opportunities for the upcoming manufacturing/public utility projects to employ a range of energy saving devices or any other mechanisms or technology to reduce GHG emissions and earn carbon credits to be sold at a price. Apart from these risks there are a host of other risks from both the supply and demand sides that the real market players confront with. The buyers of carbon credits are principally from Annexure I countries. Carbon credits are “Entitlement Certificates” issued by the United Nations Framework Convention on Climate Change (UNFCCC) to the implementers of the approved Clean Development Mechanism (CDM) projects. New Zealand. What is carbon credit? One carbon credit is equivalent to one tonne of carbon dioxide or its equivalent greenhouse gas (GHG). including the supply-side risks starting from the DNA approval risk to the CER issuance risk in a complete CDM approval cycle.and policy-related risks for CER producers. and Brazil. They are: • Especially European nations. as currently European Union Emission Trading Scheme (EU ETS) is the most active market. 45 . • Other markets include Japan.surge in carbon credits trading activities in Europe is an indication of how the emissions trading industry is going to pan out in the years to come. The carbon credits can be either generated by project participants who acquire carbon credits through implementation of CDM in Non Annexure I countries or through Joint Implementation (JI) in Annexure I countries or supplied into the market by those who got surplus allowances with them.

500 crore. it is rather inevitable that they pre-sell their potential credits in the futures market (preferably a domestic futures market. the total registered CDM projects are more than 300. to avoid forex risk attached to participation in a foreign exchange) and thereby. Further. The total issued CERs with India as a host country till now stand at 34. 46 .315 (around 34 million). In 2007. the expected value is going to be around Rs 2. there has been a surge in number of registered projects in India. It is expected that with increasing awareness this would go further up in the future. being one of the leading generators of CERs through CDM. cover their probable downside in the physical market. almost 1/3rd of the total CDM projects registered with the UNFCCC. it could be running into thousands of crores. face the aforesaid risks in large proportion. Analysts forecast that its trading in carbon credits would touch US$ 100 billion by 2010. the existing and potential suppliers of carbon creditis in India have geared up to generate more carbon credits from their existing and ongoing projects to be sold in the international markets. which if not hedged would lead to reduced realization. Currently. again around 1/3rd of the total CERs issued by the UNFCCC. has the potential of even making a CDM project unviable in the long term. India as a potential supplier: India. In value terms (INR). a total of 160 new projects were registered with the UNFCCC indicating that more than half of all registered projects in India happened last year.101. the realization of CER generators at times may not even cover the investment put in to generate the CERs and thus. Under such a situation.Most CDM projects by their very nature take a long time to generate the CERs and hence. on an average. Given the long gestation period of CDM projects and the risks involved. The role of MCX: The mcx keen to play a major role on the emission front by extending its platform to add carbon credits to its existing basket of commodities with regard to commodities futures trading. has a large scope in emissions trading. The number of expected annual CERs in India is hovering around 28 million and considering that each of these CERs is sold for around 15 euros.

15 lakh tons of RBD Palmoil.5 and 6-7 million tons respectively are major exporters India china and eu are the major importers. The import ratio is highly dependent on the duty imposed.5 million tons of palmoil and its variants a year. Malaysia (13 million tons) and Indonesia (10 million tons) are the major producers. Kakinada are the major ports for palmoil entry to India and the major trading points too. There are several commercial variants of palm oil available viz crude palmoil.5 lakh tons of crude palmoil and 3. The domestic production is very meager at 0.rbd(refined bleached deoderised)palmoil. Crude palm oil: Palm oil is obtained from fresh fruit bunches of oil palm cultivated in plantations. However. Indian scenario: • India imports roughly 2. Mumbai. refined Soya oil.5 lakh tons. • India imposes 65% duty on crude oil and 75% (imposed in 2003-04 Union Budget) on RBD Palmoil. in 2003-04 till July from November '03 India has imported 13. kapasia khalli. Government of India also imposes tariff value. Malaysia and Indonesia with 12-12. cride palmolein. Global scenario: • • • • • Palmoil with an annual production of 25-27 million tonnes is second most produced oil in the world. • In addition to the customs duty. 47 . • In 2002-03 India imported 21.rbd palmolein and palm kernel oil. Price competitiveness has been reason for increased consumption of this oil.7 lakh tons of crude palmoil and 4. on which the customs duty is calculated irrespective of the actual price at which the oil is imported. Around 80% (21-23 million tons) of global production is exported. Soya bean. • Kandla.5-3. They together account for 85% of production.8 lakh tons of RBD Palmoil.Oil and oil seeds: Crude palm oil.

61 on may 14th . Overview: Crude oil for June delivery was down $1.15 a barrel. which was once largely wasted. • Cottonseed is a by-product of the cotton plant. The contract. fiber for furniture padding. after settling down $2. Now it is being converted into food for people. Brent. • Cottonseed was a raw agricultural product. stretching a two-week tumble to $14. feed for livestock.World palm oil markets: • Bursa Malaysian derivatives is the largest market for palmoil • Malaysian and Indonesian fob prices. is expected to face volatility ahead of Monday's June crude options expiration and the May 20 June crude contract expiration.79 at $71. Kapasia khalli(cottenseed oil cake): Characterstics: • Kapaskhalli (cottonseed extraction/meal) is a by product of the cottonseed industry. which fell to $70. the delivery hub for the US contract's West Texas Intermediate benchmark crude. which is primarily grown for its fibre. Global scenario: • Annually around 15 . 2009. • Most of the production of cottonseed meal is consumed in the country of production itself. pushing front month US crude down relative to both more distant futures contracts and the alternative global crude benchmark. 48 . and the remaining portion is the cottonseed meal.9%. the lowest since February 8. fertilizer and mulch for plants. and cellulose for a wide range of products from explosives to computer chip boards. Although cotton has been grown for its fiber for several thousand years. limiting the global trade to just 5-6 lakh tons a year. or 16. Stockpiles of crude at Cushing. the biggest two-week percentage loss since the period ending January 16. the oil content of cottonseed is 18%.45 at $70. have risen in the last eight weeks to a record 37 million barrels. Globally.16.54.5 million tons of cottonseed meal is produced globally. Oklahoma. the use of cottonseed on a commercial scale is of relatively recent origin.83 on Friday.

which if consumed in larger amounts is a poison for cattle. • India produces around 2 million tons of cottonseed meal a year.5 lakh tons) are the largest importers of cottonseed meal. It is estimated that cottonseed production will be around 33% of the cotton production in bales. Around 80% of the seed is marketable surplus and arrives in the market for being crushed to oil. Uzbekistan and Brazil are the major producers globally. too there have been no significant exports. • However. However. • India's cotton output and along with it the cottonseed.• China (1-1. • Cottonseed is the second most commonly produced oilseed in the world just slightly ahead of soy.4 lakh tons respectively. USA. Several associations are promoting the production of decorticated cake in India and the production of this is expected to increase in the country. Indian scenario: • Cottonseed is a traditional oilseed of India. However.2 lakh tons) is the single largest exporter. The cattlefeed manufacturers prefer this meal as it contains lesser amount of gossypol. The major producers of cotton are also the major producers of cottonseed. In addition. meal and oil output varies considerably from year to year in response to the vagaries of weather and pest attacks. India in 2002-03 exported only 50 tons of decorticated cottonseed meal.3 and 43. India. South Korea (1-1. China. • India's cottonseed production in 2002-03 and 2003-04 is estimated at 36. • The major importers of Indian cottonseed meal (undecorticated) used to be Thailand. India does not import cottonseed meal. the low availability of decorticated meal in India has also been a major reason for the fall in exports. Pakistan. In 2003-04. • India used to be a major exporter of cottonseed extraction around two decades ago. has lowered the cottonseed demand globally. in India mainly undecorticated meal is largely produced. in 2003-04 rapeseed/mustard has marginally overtaken this seed. the demand for other oil meals like soymeal. while Europe (2 lakh tons). 49 . The remaining is used as seed is fed to cattle. • The global production of cottonseed is around 35 million tons in the recent years. • The protein content of the scientifically produced meal is 40-42% against 20-22% in the traditionally processed meal.

• Crushers. animal feed manufacturers and farmers are the major stakeholders in the soy value chain worldwide. Yeotmal are the major trading centers where cottonseed from the cotton procured by the Maharashtra State Cooperative Cotton Growers Marketing Federation is auctioned off. About 85% is crushed worldwide. • Soybean and soyoil production of 170-185 and 25-31 million tons account for 55-58% and 25-30% of global oilseed and oil production respectively. With imports. Maharashtra.5 million tons). 50 . • The production is highly dependent on the monsoon and fluctuates between years • The Soy is a Kharif crop. China crop starts arriving from Aug-Sept. refined oil manufacturers.5-2. • In the world 55-60. Indian scenario: • India produces 5-7 million tons of beans. Nagpur. Brazil. • US. Parbhani.5 million tons) and India (1-2 million tons) are the major importers of oil. Brazil (12-18 million tons). Argentina. China (1. • USA (20-30 million tons). Refined Soya oil: Characteristics: • Soybeans on crushing and solvent extraction yield soyoil at 18% recovery and soymeal.Major trading centres: Akola. 1 million ton of oil and 3-5 million tons of soymeal in a normal year.5 million tons • Madhya Pradesh (3. • The prices follow the international sentiments and display very high. Peak arrivals are from October-November. America. while it starts from Jan-Feb in S. Rajasthan are the major producers of soybean in India. India are the major producers in order of production. Argentina (5-10 million tons) are the exporters of beans. while China (18-20 million tons) and EU (15-18 million tons) are the major importers.5-4. the total oil availability in the country is around 2. sown in June-July and harvested by SeptemberOctober. India. • Argentina (3-5 million tons) and Brazil (2-3 million tons) are the major exporters of oil. China. 8-10 and 42-45 million tons of beans. oil and meal are traded annually. In US.

a very small proportion of the crop is consumed directly by humans. • Modern soybean varieties generally reach a height of around 1 m (3 ft). Kota in rajesthan are major trading centers. • While in US. Argentina. India and China crop starts arriving from Aug-Sept. accounting for 55-58% of total global oilseed output of around 390-400 million tonnes. • US. which is widely used in the animal feed industry. Global Scenario: • The annual global soybean production has been in the range of 210-230 million tonnes in the recent years. mandsore in madhyapradesh. It is estimated that above 85% of the output is crushed worldwide. • The cultivation of soybean is successful in climates with hot summers. • Weather. • Though. Soya bean: Characteristics: • Soybean is an important global crop and processed soybean is the largest source of protein feed and second largest source of vegetable oil in the world. soybean products appear in a large variety of processed foods. 32-48. dewas. Ujjain. China and India are the major producers in order of production with production in these countries ranging around 70-80. 51 . cotton and pests & diseases are the major factors influencing production. Brazil. 5560. it starts from Jan-Feb in S. and take 80-120 days from sowing to harvesting. with optimum growth in moist alluvial soils with a good organic content. • The major portion of the global and domestic crop is solvent-extracted with hexane to yield soy oil and obtain soymeal. America. • The annual global trade in soybean is estimated to be around 70-80 million tonnes.Major trading centers: Indore. 14-16 and 8-10 million tonnes in the recent couple of years. acreage under other competitive crops like corn. • It can grow in a wide range of soils. Nagpur in Maharashtra. Temperatures below 20°C and over 40°C are found to retard growth significantly. with temperatures between 20°C to 30°C being optimum.

Akola. Sangli. with better returns encouraging more farmers to adopt this new crop. Indonesia. US is the largest exporters for soybeans. China (35-40 million tonnes) and EU (12-16 million tonnes) are the major importers. October and November are the peak arrival months. • The acreage under this crop has more than doubled in the past two decades to around 11 million hectares currently being sown under this crop. While. UAE. 25%. with all-India arrivals crossing 10 lakh bags of approximately 90 kg on the peak arrival days. • The production is dependent on the monsoon and fluctuates between years. with Maharashtra reporting the earliest arrivals. Thus. Rajasthan and Andhra Pradesh are the major cultivators of this important oilseed. USA (30 -35 million tonnes). Thailand. 6-7% and 1-2%. Maharashtra. Dewas.5-7 million tonnes. Major Trading Centres: Indore. Sowing can extend upto end of July in different parts of the country. with sowing taking place after the first monsoon showers in late June or early July.9 million tonnes by the Government of India. Kota in Rajasthan are major trading centres. Argentina is the largest exporter of soy oil and soy meal globally. • Madhya Pradesh. Greece being the major importers. Nagpur in Maharashtra. with their respective contributions usually around 60%. Government policies are in favour of developing the domestic crushing industry and supporting Indian farmers anddo not promote import or export of soybean.• While. Japan. Mandsore in Madhya Pradesh. soy oil and soymeal are also widely traded globally with annual trade of around 9 million tonnes and 52 million tonnes respectively. • The harvesting commences from September. • In addition to soybean. Argentina (5-15 million tonnes) are the exporters of beans.5 million tonnes with Vietnam. India out of its total soymeal production of around 6. Ujjain. Indian Scenario: • India's annual production of soybean has been around 8. • India is highly dependent on imports to meet domestic edible oil requirement.5-10 million tonnes in the recent years with India's production in 2009-10 estimated to be around 8. there is virtually no import or export of soybeans. • Soybean is exclusively grown in the khariff season in India. • However. exports around 3. 52 . Brazil (23-28 million tonnes).

Consequently. mustard oil in Delhi after drifting in a range of Rs 20-30 per quintal through out the weak.Overview: Edible oil imports in April 2010 fell by 22 percent due to huge stockpiles in the domestic market. Global edible oil markets continue to fall on economic crisis in Europe and strong US Dollar. According to market men. With the oil-millers in Agra finding it more profitable to buy UP mustard seed this has slightly firmed prices. On the other hand. Edible oil end week improved as CPO firmed in Kandla Vanaspati ghee (hydrogenenated fat) surged to a high of Rs 670/845 per tin gaining Rs 10/15 on heavy demand from UP. soya and cottonseed oil fell Rs 20/30 per quintal following weak advices from KLCE and Chicago soya oil complex. CPO (crude palm oil) in Kandla was also traded down from Rs 3670 to Rs 3660 per quintal on selling pressure. In contrast. marketmen said. While soya DOC was down Rs 200 at Rs 17800 per tonne on weak advices from Kota where prices slumped by Rs 400 to Rs 16000 per tonne on lack of export demand. Imports during April 2010 reported at 5. groundnut 53 . this year mustard seed production in Rajasthan is estimated to be lower by around 5-6 lakh tonne. closed firm by Rs 30 at Rs 4600 per quintal end week. West Bengal and Bihar. The DOC (deoiled cake) section remained depressive past week.75-lakh tonnes lying in the ports.9 lakh tonnes almost same as that of last year. Niwai. Edible oils imports during first six months of edible oil year beginning from November is reported at 42.43 lakh tonnes against 6. Bharatpur. with the advancing days arrivals of mustard seed in Alwar. Tonk.99 lakh tonnes in same month of last year. they added. In view of the marriage season demand ahead. Obviously. Total stock available in the market is estimated at 12. Mustard oil expeller closely followed the trends prevailing in Rajasthan and UP producing centres. Soybean futures at CBOT six weeks low of 937 cents and currently trading steady at 943 cents. It may not be increased more in this year. Vanaspati ghee in Kanpur was also traded up by Rs 25/30 per tin.25 lakh tonnes of which 5. Jaipur and Kota have thinned down. mustard seed production in UP is reported to be good and this led to increase in arrivals at Kanpur and Jhansi a fortnight ago. Historic data of oil and oilseeds: Mixed trends were noticed in the Delhi oil and oilseeds market past week. Edible oil is expected to tread the same line. prices are expected to move further up by Rs 20/30 per tin.

• Around 60 % of the global rubber production is used by the transportation sector. • Kerala accounts for 90% of India's rubber production. of which Asian countries have produced 6.13 million ton. Global Scenario: • Thailand. India. Block Rubber accounts for 10% of the production and 40% of the imports. RSS 4. Indonesia. RSS 2. • RSS (Ribbed Smoked Sheets) account for 72% of the production and 45% of the imports. • On the consumption front.9 million ton was consumed in India and China alone. Mustard DOC too lost Rs 200 per tonne on lack of buying support. China. Indian. RSS 3. Block Rubber is designated in the grades of ISNR.9 million tons in 2003.DOC tumbled by Rs 500 to Rs 16000/17000 per tonne. Block rubber and Preserved Latex Concentrates. Crepes. The most important forms in which NR is processed and marketed are the following: Sheets. natural or synthetic rubber cannot be used individually and has to be blended. RSS 5 are the most commonly produced and marketed. The other producer is Karnataka. Plantations: Rubber: Characteristics: Natural Rubber (NR) is produced from latex or field coagulam obtained from rubber trees planted in plantations. global NR consumption is 7. In India sheet rubber designated as RSS 1. In this sector.76 million tons. The total synthetic rubber consumption in 2003 was 1. of which 1. Scenario: • India's rubber production in India is around 6-7 lakh tons. • The global production fluctuates between 6-8 million tons. 54 .89 million tons in 2003. with a production of 7. Malaysia. Vietnam are the major producers of rubber in the World.

India's tyre exports are around Rs. • Among the consumers China leads the way being followed by India. Pakistan.9 lakh bales. Fiber: Characteristics: Kapas is unginned cotton or the white fibrous substance covering the seed that is obtained from the cotton plant. Kochi. • US have a considerable share in world exports. India's imports vary between years and is currently around 50000-60000 tons a year. Duty-free imports against the advance licence scheme is permitted for re-export and rules mandate that only 44 kg of natural rubber can be imported against 100 kg of exports.5 million bales (1 bale=170 kg) is the World's third largest cotton producer. India. Egypt. Major Indian Markets: Kottayam. 55 . Tyre is the major form in which rubber is exported from India. India also has the largest area under cotton. Global scenario: • The world cotton area and production are estimated at around 30-31 million hectares and 20 million tons respectively. with China. Pakistan. However. US and India being the three largest producers of cotton. India produces around 11% of the world's cotton from 20% of the area. Indian scenario: • India with an annual production of 15-16. 1200-1300 crores a year.• The tyre industry. • The biggest cultivators of cotton are America. other agencies peg the production at 140160 lakh bales. Kozhikode and Kannur in Kerala are the major primary markets. India and China both fall short of their domestic requirement and are net importers. consumes 52 % of the almost 7 lakh rubber produced in the country. • The Ministry of Agriculture estimates India's cotton production in 2003-04 at 123. US and Turkey. Duty-paid i mports of natural rubber under open general license attract 20 % import duty. China. Sudan and Eastern Europe.

Cardamom plants normally start bearing two years after planting. Tamil Nadu and Karnataka account for more than 95% of the area under and output. • It also accounts for more than 30% of exports. Punjab. India earns foreign exchange to the tune of $10-12 billion annually from exports of cotton yarn. Haryana. Andhra Pradesh. 1. • About 90% of the produce is consumed within the nation. making it India's largest net foreign exchange industry. Spices: Cardamom. • Cotton accounts for more than 75% of the total fibre that is converted into yar by the spinning mills in India and 58% of the total textile fabric materials produced in the country. • In India cotton is sown during March to September and harvested during September to April. turmeric Cardamom: General Characterstics: Cardamom is the 'Queen of Spices' as it is one of the most exotic and highly prized spices. apparel and made-ups.50. coriander. • Although cotton is cultivated in almost all the states in the country. thread. Malabar. which accounts for nearly 20% of the total national industrial production and provides employment to over 15 million people.• Despite having the largest area under cotton in the world. My sore and Ceylon type. The two major commercial varieties of small cardamom in the world are the Malabar and the Guatemalan.. the 9 states of Maharashtra. fabrics. Rajasthan. • Cotton is the most important raw material for India's Rs. Indian Scenario: • Production has decreased marginally from 11920 MT in 2002-03 to 11415 MT in 2004-05 • Kerala (70%). Karnataka (20%) and Tamil Nadu (10%) are the cardamom growing states in India. India ranks third in world output of cotton due to its abysmally low average yield of 300 kg against a world average of 550 kg per hectare. Gujarat. but more aromatic. 56 . Indian cardamom is slightly smaller. Madhya Pradesh. There are three distinctive types of cardamom grown in India viz.000 crores textile industry. The peak marketing season for the crop is during November to March.

Cambodia and Papua New Guinea are the major cardamom growing countries. • Cardamom is usually stored in cooler areas to preserve its inherent properties. El Salvador. Laos. Tanzania. However. • World production of cardamom is estimated at 30000 -35000 MT. • Time of arrival of new crop in the market. • Indian cardamom specially Alleppey Green is a premium grade against all other international grades. colour. • Production in other countries particularly Guatemala. Factors Influencing Cardamom Markets • Fresh cardamom is green and has a characteristic aroma. Netherlands and UK Global Demand-Supply Scenario • Guatemala. Sri Lanka. distantly followed by Kuwait. • Guatemala produces nearly two-third of the total global cardamom production.8% of its total production. • Year ending stocks and stocks-to-consumption ratio. Saudi Arabia accounts for 42% and Japan 39% of India's exports (2004-05). Its production has increased significantly from 13500 MT in 2002 to 23000 • Saudi Arabia is single largest importer of cardamom. aroma and size are the major factors that influence cardamom prices. Freshness. India. in addition to the current supply-demand scenario. Major Indian markets: 57 . • Export of value-added product from cardamom like cardamom oil and cardamom oleoresins are increasing to Germany. Vietnam. the production and export from Guatemala has profound influence on Indian cardamom prices. • Weather and annual production of a year.• India roughly exports 5% .

soda & syrups. or carrot family. Israel. coriander is widely grown in home gardens on a small scale. Chinese and Mexican cuisine. Egypt. Kumbum and Pattiveeran Patti in Kerala. • The global trade in coriander is estimated to be around 0. It is an important ingredient in the manufacture of food flavourings. which is never included in official statistics. Iran and China are the major exporters. Both products are used in the flavouring and aroma industries. Important markets for cardamom in the country are Vandanmendu. Egypt. Turkey. • The fresh green herb is called cilantro. UK. Kumily. official estimates are rarely available for this crop in most producing countries. USA. Canada. Morocco. Morocco. Additionally. Middle East.1 lakh tonnes a year. dhania is an annual spice crop and a member of the Umbelliferae. Germany etc are the major importers. which are used primarily for culinary purposes. • The fruits (seeds) are widely used as condiments with or without roasting in the preparation of curry powders. Turkey. • The major global producers are India. It is used in southeast and southern Asian. meat products. South-east Asia. or Chinese parsley.85 . US. The coriander plant yields both the fresh herb and spice seed. and for flavouring salads and soups. Bodinayakanur. Global Scenario: • The global production of coriander seed is estimated to be around 6 lakh tonnes. Argentina and Mexico. 58 . • The spice is also employed for the preparation of either the steam-distilled essential oil or the solvent-extracted oleoresin. Romania. candy preserves and liquors. Thekkady. The other producers are Iran. While. Coriander: General Characteristics: • Coriander (Coriandrum sativum). puddings. China. India. Russia and Ukraine.Cardamom is sold at auction centres. in bakery products. Romania. However. sausages and seasonings.

The demand from this sector peaks during April to June. India exported 30.88 lakh tonnes and area under cultivation at 3. The production from Rajasthan and Madhya Pradesh are reported at 1. which consume around 50% of the production are mostly located in the southern states of India and Delhi.000 tonnes of coriander a year. The major buyers were Malaysia (7050 tonnes). • Rajasthan (54%) and Madhya Pradesh (17%) are the two largest producing states in the country contributing over two-thirds to the country's total production in 2006-07. Major Indian Trading Centres: The major markets are located in Rajasthan and Madhya Pradesh.200 tonnes of coriander in 2008 valued at Rs 204 crores in 2008. UAE (5450 tonnes).5%.30.55 and 0. Almond: 59 .Indian Scenario: • India is the biggest producer. • The major domestic buyers of coriander seed in India are spice-processing agencies.9%). consumer and exporter of coriander in the world with an annual production averaging around 3 lakh tonnes. • Coriander for seed cultivation is grown as a rabi crop with sowing undertaken during October . The three largest markets are Kota.50 lakh tonnes respectively.November and new crop arrivals seen in February . Others: Almond. output is 2008-09 is reported to be normal. Assam (6. guar seed.2%) and Tamil Nadu (2%). Orissa (3. • Official estimates of area and production are released by the Spices Board. potato. meltedmentholflakes. The other producers are Gujarat (6.March.30 lakh tonnes in 2007-08. Karnataka (3. which also coincides with the peak arrival period. Andhra Pradesh (3. However. • India annually exports around 25. India and the latest estimates available peg India's production in 2006-07 at 2. The production fluctuates widely between years and has varied from below 2 lakh tonnes to above 4 lakh tonnes in this decade. Pakistan (3215 tonnes) and Saudi Arabia (2475 tonnes). Rajasthan's coriander production is estimated to have dipped sharply to around 1. Ramganj Mandi and Baran in Rajasthan.6%).3%).000 . mentha oil.62 lakh hectares.

16.General Characteristics: • Almonds. Blue Diamond is owned by over two-thirds of California growers and markets one-third of California's crop. as it is poisonous. which is located in Sacramento. Bitter almond is slightly shorter and broader than sweet almonds and are mainly used for extracting almond oil and not consumed as food. China and India with a production of 26. of which sweet almond is the variety. though considered to be nuts are technically the seed of the fruit of the almond tree. bakery and snacking are the three major global categories for almond usage. Its production is reported to be 38% of the total output. Shelling almonds refers to removing the shell to reveal the seed. 9500.5 lakh tonnes in the recent years. Global scenario: • The annual global Sweet almond production on shelled-basis has been in the range of 7 . Record crops and a steady increase in production were seen from 2005-06 to 2008-09 (Almond crop year is from August to July). • Chocolate confectionary.000 tonnes. California. Turkey. which is then removed to reveal the white embryo. • The state of California in US is the most important producer of Sweet almonds. • United States of America is the single largest producer. • Almonds are commonly sold shelled. botanically referred to as a drupe has an outer hull and a hard shell with the seed inside. However. • The world's largest almond handler is the Blue Diamond Growers Cooperative. Almonds with their shells attached are called unshelled almonds. • The other producing countries are Australia. Monterey (10%). Chile. which is a medium-sized tree that bears fragrant pink and white flowers. Blanched almonds are shelled almonds that have been treated with hot water to soften the seed coat. followed by Carmel (12%). as this region is reported to be accounting for 99% of the American production. Butte/Padre (9%) and Butte (8%). The fruit. 60 . with the country contributing to over 80% of the global almond production.000. • Sweet almonds and Bitter almonds are two forms of almonds. which is consumed directly or indirectly by humans as a food product. the output in 200910 is forecasted to dip on account of unfavourable climatic conditions. consumer and exporter of Sweet almonds. European Union. • Nonpareil is the single largest variety planted in California.8.

the peak harvesting period of the Californian crop starts from midAugust and extends till September that of Australian crop occurs between February and April. with maximum demand witnessed in November.000 tonnes in 2008-09.6 lakh tonnes (on shelled basis) in the recent years. • India has to resort to imports to meet almost its entire requirements as domestic production of sweet almonds is only around 1. from where the shelled almonds are transported to other consumption centres. • While. which import shelled almonds. The major exporters are US.000 tonnes. Japan.800.700 tonnes (on shelled basis) in 2008-09. Imports from Australia pick up during April and May after the harvesting season in that country. European Union. While. 1. has lead the growing consumption of almond in the country in recent years.000 tonnes. the imports in 2009-10 are expected to rise to 50.40. Canada and Turkey are the major importers with imports of 2. Australia and Chile with exports of 4. 61 . The annual rate of increase in India's domestic consumption of almonds is reported to be around 20%. Indian imports in 2008-09 is reported to be above 45. unlike almost all other importing nations.00.000 tonnes. Thus heavy imports of new Californian almonds are seen from September to meet the strong domestic demand during the festival season. • India imports almonds with shells and processes it domestically to obtain shelled almonds. The other almond trees present in the country are of non-descript variety and mostly produce bitter almonds.000 tonnes.000 tonnes and 14. • The Indian festival season extending from September to December is the peak consumption period for almonds. The other major country from which India imports almonds is Australia.300 tonnes and 6.200 tonnes. 12. Spain is the single largest producer in the European Union.000 tonnes.200 tonnes on a shelled basis in 2008-09. • More than 95% of almonds consumed by Indians is imported with more than 80% of imports being sourced from California.000 tonnes. 45. This is due to availability of cheap labour and better appearance and lesser losses in manual shelling of almonds as against mechanized shelling. • The annual trade in almonds has been around 4. • Most of the manual shelling of almonds in India is undertaken at Bombay and New Delhi.500 and 1. 21. 19.79. India. Indian scenario: • The ever-expanding middle class and increase in health awareness.

It may even increase to 8 lakh tons as has been visible in 2003-04. petroleum drilling and textile manufacturing. the endosperm. (Cyamopsis tetragonoloba (L. 29 kilos of Guar powder. Haryana. India accounts for 80% of the total guar produced in the world. Haryana. Uttar Pradesh and Madhya Pradesh. is estimated at around 6 lakh tons. The main guar-growing region in India is Rajasthan. It is grown in arid zones of Rajasthan.Major Indian trading centers: Mumbai and New Delhi. or clusterbean. 70% of India's production comes from Rajasthan. African crop the total world supply of Guar Split is around 4-5 lakh tons in a normal year. The other producers are Gujarat.sub tropical areas spread over the north and north west of India and east and south east of Pakistan. Punjab. which is cold water soluble forming thick solutions at low concentrations. • In food it is used as a thickener and as a mean of preventing ice crystal formation in frozen desserts. Taking the US. Supply Scenario: • • • • India is the major producer of Guar Seed followed by Pakistan and US. Guar is a crop of semi arid . minus their bean pods yields roughly 29 kilos of endosperm. some parts of Gujarat. 100 Kilos of beans. and the husk. India's guarseed production fluctuates between years and has been around 2-6 lakh tons in the recent years. • Industrially it is used in mining. Australian. It is from the endosperm that guar gum is derived. and Madhya Pradesh. 62 .) Taub). • The guar seed consists of three parts: the germ. is the source of a natural hydrocolloid. India's guar production in 2003. Guar seed: Characteristics: • Guar.

Jodhpur. Haryana. Rajasthan is the largest growing state of Guar seed in the country accounting for 70% of total production. Sabarkantha. 63 . Gurgaon. Bikaner.000 tons and the domestic market is of around 25. It is sown immediately after first showers say in July and harvested around November each year. Hanumangarh and Jhunjhunu). which together accounts for an export of 117000 tons of guargum exports valued above Rs. Vadodara and Ahmedabad).000 tons/year. Table 1: Guar Seed Major Producing States & their Trading Centers State Rajasthan Major Trading Centers Hanumangarh. 300 crores.000 tons/year. Banner. The other producers are Gujarat. Ferozpur. Muktsar and Mansa). Uttar Pradesh and Madhya Pradesh. Ganganagar. The main demand of guar seed originates from the US petroleum industry and also the oil fields of Middle East. Harayana (Bhiwani. Nagaur. The crop yield is directly related to the monsoon. Sirohi. India exported 33000 tons of guar gum refined split and 84000 tons of guar gum treated and pulverized in 2002-03.November. US consumption is estimated to be around 40. It requires a relative long growing season of 20-25 weeks. which requires 8-15 inch of rain in 3-4 spells and is harvested in October . Punjab.• Guar is a rain fed monsoon crop. Demand scenario: • • • • • World market for guar gum is estimated to be around 150. The export from India is around 115. Gujarat (Kutch. Banaskantha. 70% of which is produced by India and Pakistan. Sikar. Mahendragrh and Rewari) and Punjab (Bhatinda. parts of Mehsana.000 tons. Dausa. Major Guar Seed producing States & Trading Centers Guar seed is grown in the northwestern parts of country encompassing states of Rajasthan (Churu.

Sabarkanta. Sikar. Banaskanta. Mehsana and Patan Adampur. Sirsa and Bhiwani Bhatinda Haryana Punjab • Producti on pattern.Sriganganagar. Jaipur. Ellenabad. Hisar. which is linked to monsoon rainfall Weather • conditions and rainfall pattern • • Stocks in the hands of traders or producers Demand from overseas market for Guar & its derivatives products 64 . Bikaner. Jaisalmer. Fatehbad. Jodhpur. Barmer and Nagaur Gujarat Kutch.

OPEC abandoned its price band in 2005 and was powerless to stem the surge in oil prices. price would have tracked the world price averaging $28. crudeoil. In the absence of price controls.Important comodities: The some of the major comodities are gold.S.50 and $3. silver. which was reminiscent of the late 1970s. 2000 adoption of the $22-$28 price band for the OPEC basket of crude.64 per barrel adjusted for inflation to 2008 dollars. Crude oil: History and analysis of crude oil: Introduction: Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $19.S. The apparent 20% price increase in nominal prices just kept up with inflation. prices were stable near $3. In the post World War II era U. copper. Crude Oil prices ranged between $2. The decline in the price of crude when adjusted for inflation for the international 65 . and wheat.50 in 1948 to about $3. With limited spare production capacity. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply. petroleum industry's price was heavily regulated through production or price controls throughout much of the twentieth century.S. the U.00 in 1957.60 per barrel. The U. oil prices only exceeded $24. soyabeans.00 from 1948 through the end of the 1960s. That means that only fifty percent of the time from 1947 to 2008 have oil prices exceeded $19. oil prices at the wellhead averaged $26.00 per barrel in response to war or conflict in the Middle East. The price oil rose from $2. but in real terms the price of crude oil declined from above $19 to $14 per barrel.60 in 2008 prices.00 per barrel. When viewed in 2008 dollars an entirely different story emerges with crude oil prices fluctuating between $17 and $19 during most of the period. From 1958 to 1970.68. Until the March 28.

5 million barrels per day less than a year before. The Yom Kippur War started with an attack on Israel by Syria and Egypt on October 5. In 1979 and 1980.00 per barrel. the price of oil had quadrupled to over $12. 1973.21 per barrel to $13. Consequently worldwide crude oil production was 10 percent lower than in 1979. the world 66 . According to statistics from the British firm BP. with five founding members Iran.55 per barrel. By the end of 1971. Libya. the world crude oil price was relatively flat ranging from $12. The combination of the Iranian revolution and the Iraq-Iran War cause crude oil prices to more than double increasing from $14 in 1978 to $35 per barrel in 1981. Factors effecting crude oil: Firstly. events in Iran and Iraq led to another round of crude oil price increases. Established in 1960 OPEC.5 million barrels per day of oil production between November 1978 and June 1979.producer suffered the additional effect in 1971 and 1972 of a weaker US dollar. In 1972. Algeria and Nigeria. Iraq. took over a decade to establish its influence in the world market. By November. United Arab Emirates. When adjusted for inflation world oil prices were in a period of moderate decline. the price of crude oil was about $3. From the foundation of the Organization of Petroleum Exporting Countries through 1972 member countries experienced steady decline in the purchasing power of a barrel of oil. an increasingly short supply of oil in the world is the fundamental cause. Iran already weakened by the revolution was invaded by Iraq. By the end of 1974. Saudi Arabia and Venezuela. the combined production of both countries was only a million barrels per day and 6. six other nations had joined the group: Qatar. The Iranian revolution resulted in the loss of 2 to 2.00. In September 1980. Indonesia. Two of the representatives at the initial meetings had studied the Texas Railroad Commission's methods of influencing price through limitations on production. Kuwait. From 1974 to 1978.

when the dollar devalues by 1 percent. Almost all oil deals worldwide are priced in US dollars.000 barrels per day as of Nov. With little price elasticity from both demand and supply. Thirdly. to the hike in oil prices. it causes an oil price hike of the same degree.but at the same time. the U. In addition. meteorological and political elements also affect prices. and the dollar's devaluation puts on the pressure for higher oil prices. To maintain an income and purchasing power. government's pursuit of a weak dollar policy in recent years has also contributed. demand keeps increasing. The numerous speculation deals have a massive impact on oil futures prices considering the leverage effect of futures margin deals. Currently. 1. commodity markets hold an average speculation volume of over 120 billion US dollars each month. and the case is still the same today. According to studies. The supply remains tight and prices keep soaring despite OPEC's decision to increase crude oil production by 500.1 billion dollars).3 billion dollars) and crude oil (30. to a certain degree.leaving less of a surplus to use . any trivial event will send prices skyrocketing. Secondly.has been demanding more oil than can be produced since 1981. oil production in most countries has already or will soon go down . raising prices has become a major strategy of OPEC members. With excessive liquidity worldwide. funds behind oil futures speculations will remain the same.S. 67 .S. chiefly coming from natural gas (30. short-term speculations on oil futures by large amounts of funding also drive prices up. A Citi report in May 2006 mentioned that U. technical.

For example. Price movements in commodities using fundamental analysis can be broken down into these simple formulas: • Demand > Supply = Higher Prices • Supply > Demand = Lower Prices Supply of Commodities The supply of a commodity is the amount that is carried over from previous year(s) of production and the amount that is being produced during the current year. crop diseases and technology. Supply and demand is a very simple equation. Eventually. as it is more profitable to produce commodities when prices are higher. the picture will change and that will lead to a good trading opportunity. Oppositely. we just have too much of a commodity and prices fall accordingly. I like to look at commodities that are trading at multi-year highs or lows. There is an old saying among commodity traders that low prices cure 68 . production strikes. the current supplies of soybeans would include the amount of crops in the ground and the amount that is left over from the previous season. Some times supplies will be tight and prices will be high. The rule of thumb is that demand will increase when the price of a commodity moves lower. the more that is carried over from the previous season.Fundamental analysis: Fundamental analysis is a means of analysing commodities and trying to predict where the prices of commodities should be trading and what they will do in the future. Typically. Commodities trade in cycles. Other times. but it gets more complicated when you try to forecast prices in the future. There are many factors that can impact the supply of commodities like weather. As you might expect. the lower the prices will fall. amount of acres planted. The main basis for fundamental analysis is supply and demand. demand will decrease as the price of a commodity increases. Demand for Commodities Demand for commodities is the amount that is consumed at a given price level. The main thing to remember when using fundamental analysis is that high prices for commodities will lead to an increase in production. demand will typically drop as prices move higher.

Most professional commodity traders like to 69 . It is even more difficult for new commodity traders to do this. it is likely that corn futures will trade with a downward bias. but I prefer to use technical analysis to capture shorter-term movements in commodities prices. there are numerous reports that are compiled by government sources – USDA. Consumption patterns change as the prices of commodities move higher and lower.50 per gallon than you would at $3 per gallon. Or. you have to forecast in the future as to what the supply and demand scenario will be. Fundamental analysis of commodities is simple economics. especially since you will be competing against experts who have a lot more information and experience than you. there might be weather problems during the growing season that will lower the production of corn. Just think about how you would use more gasoline at $1. I can tell you it is almost impossible to do this. It may seem like a daunting task to find all the current data and compare it to previous years and see how prices reacted under those conditions. Using Fundamental Analysis to Predict Future Prices of Commodities Prices will fluctuate in the short term. This means that more of a commodity will be consumed at lower prices. In these cases you have to be flexible and realize that prices won’t go down forever. Many of the larger commodity brokers will also publish fundamental research for their clients. at some point.low prices. which lowers the supply and thus prices will eventually increase. Now. the price of corn will get too low and demand will increase. if the supplies of corn are at a five-year high and we just planted a record amount of acres of corn for this season. use a long-term strategy when using fundamental analysis to forecast commodity prices. To begin your fundamental research of commodities. and even experienced traders. so it is not easy to make fundamental forecasts of commodities prices and make short-term trades. Worse yet. You should look for trends that are developing that will cause a shift supply and demand factors. You would be likely want to trade from the short side. For example. The longer-term trends in commodities are easier to spot with fundamental analysis. I recommend that new traders. What you want to do is look for trends in production and consumption and trade with that bias. department of energy and the futures exchanges.

producers of a commodity will eventually produce less and this will eventually stabilize prices. commodity trading strategies: Scale trading commodities: Scale trading in commodities is a very interesting trading strategy that is often touted as a “can’t lose” strategy.90.70. while the price range for the last 20 years is $1. this would be an ideal candidate for scale trading. The first thing you want to do is look through historical charts of commodities and find the ones that are trading at the low end of their historical ranges – preferably within the lower 25 percent of their historical price range. you will need to set-up levels where you will buy and sell futures contract on that commodity. You do not look to sell or short commodities. When trading commodities. crude oil. Scale Trading Strategy You only initiate trades buy buying when you scale trading commodities. Another thing worth noting is that scale trading works best for physical commodities like corn. etc.know what the big picture is with commodities using fundamental analysis and then they use technical analysis to time their entries and exits. The reasoning is that physical commodities will always hold a certain amount of value.80. $1. it is often difficult to figure out when a commodity is trading at a low enough price to buy. In theory.90. currencies or Treasury notes.80 to $5. Once your first order is filled at $1. if corn were trading at $2. Once you have identified a commodity in the bottom 25 percent of its historical range.000 70 . live cattle.00 a bushel. When the price gets too cheap. Scale trading was not necessarily meant for financial futures like the E-mini S&P. etc.$1.00 for a profit of $500 (10 cents times 5. that statement might be correct. you would place an order to sell that contract at $2. You should look back at least 10 years for the historical range. $1. What Is Scale Trading? Scale trading uses a simple principle of buying low and selling high. For example. You could set-up levels to start buying every 10 cents lower .50. but scale trading has some fairly simple guidelines to find good buying levels. but the strategy is only as good as the trader using it and the trader has sufficient trading capital.

You can also change the price levels to suit your trading style. It is important to make sure you commit yourself to the strategy and follow the rules. you should have consistent strategies that will let you know under what circumstances you will buy. if the market keeps moving down to $1. Most commodity trading strategies use some form of technical analysis for the trading decisions. you would buy another contract and place an order to sell that futures contract at $1. There are numerous indicators which measure overbought and oversold levels 71 . but I also monitor the fundamentals of the markets.80. The basic theory of scale trading is that you scale into the market at already depressed prices and you sell at predefined prices until all your contracts are closed. Types of Commodity Trading Strategies: Commodity trading strategies are simply the basis for why and when you will buy and sell commodities. one might look to sell a commodity after it has had a long rally and becomes overbought. Oppositely.00. This does not mean watching the financial news or reading a commodity newsletter for the latest trading tips. You should have some well thought out strategies before you begin trading commodities. Most commodity trading strategies consist of either a range trading or breakout methodology. Rather.90 with an order to sell at $2. I’ll first discuss the basic commodity trading strategies using technical analysis and then I’ll include some information on using fundamental analysis for trading commodities. you have to calculate to maximum amount of futures margin and draw down losses this strategy could incur if the market keeps moving lower. Scale trading a market could take a couple weeks or it could last several years.90.bushels). Then you would still be holding the other contract you bought at $1. Now. Range Trading Strategy Range trading in commodities simply means buying near the bottom of a range (support) and selling at the top of a range (resistance). I actually use variations of both types of strategies in my trading. sell and limit your losses. Another way to look at this strategy is that one might look to buy a commodity after it has experienced a lot of selling and becomes oversold. so it is up to your personal taste on which type of strategy might work best for you. Each type of strategy has its pros and cons. I mainly use technical analysis when I trade. More importantly.

Stochastic. This strategy works best when commodities are trending strongly. It doesn’t matter whether the trend is up or down. Fundamental Trading Strategy While trading breakouts and trading ranges usually come with specific set-ups for buying and selling commodities. Volumes at the exchange in 2003 were a record breaking 454 million 72 . as they are the peaks and troughs.like RSI. is the world's oldest futures and options exchange. Trading Breakouts Trading breakouts in commodities means that a trader will look to buy a commodity as it makes new highs and sell a commodity as it makes new lows. you might buy soybeans because the weather has been dry during the summertime and you expect a much smaller crop. fundamental trading leaves much more room for interpretation. as markets can stay overbought or oversold for long periods of time. you will be left wondering where to get in and out of the trades. Or. For example. Many professional traders use these techniques when they are managing large sums of money. However. The top commodity exchanges: 1) Chicago board of trade: Established in 1848. These strategies work well when the market has no significant trend. Even worse. More than 50 different options and futures contracts are traded by over 3. Momentum and Rate of Change. The drawback of this strategy is that it performs very poorly when markets don’t establish strong trends. as you are buying new highs and selling (shorting) new lows. The philosophy for this strategy is simple – a market can’t continue its trend without making new highs or new lows. but this type of trading claims a huge share of victims every year.600 CBOT members through open outcry and e trading. New highs and lows can easily be spotted on a chart. you expect demand to increase for crude oil from China. so you buy oil futures. since opinions can easily be swayed the hype that is often reported in the news. I do not recommend this type of trading for the new commodity trader. You can get lucky a couple of times trading off the news. a trader could have a string of bad losses when a market forms a major trend.

contracts. On 12 July 2007, the CBOT merged with the CME under the Group holding company and ceased to exist as an independent entity. In 1864, the CBOT listed the first ever standardized "exchange traded" forward contracts, which were called futures contracts. In 1919, the Chicago Butter and Egg Board,[1] a spin-off of the CBOT, was reorganized to enable member traders to allow future trading, and its name was changed to Chicago Mercantile Exchange (CME). On October 19, 2005, the initial public offering (IPO) of 3,191,489 CBOT shares was priced at $54.00 (USD) per share. On its first day of trading the stock closed up +49% at $80.50 (USD) on the NYSE. In 2007, the CBOT and the CME merged to form the CME Group. 2)Chicago mercantile exchange: It is an American financial and commodity derivative exchange based in Chicago. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a nonprofit organization. The exchange demutualized in November 2000, went public in December 2002, and it merged with the Chicago Board of Trade in July 2007 to become CME Group Inc. The Chief Executive Officer of CME Group is Craig S. Donohue. On August 18, 2008 shareholders approved a merger with the New York Mercantile Exchange. CME trades several types of financial instruments: interest rates, equities, currencies, and commodities. It also offers trading in alternative investments such as weather and real estate derivatives.CME has the largest options and futures contracts open interest (number of contracts outstanding) of any futures exchange in the world. On October 7, 2008, the Chicago Mercantile Exchange (CME) Group announced that it will be teaming up with Citadel Investment Group to create a transparent electronic trading platform for credit default swaps. The joint venture between CME and Citadel will operate as an independent organization with its own board of directors and management team. The new venture plans to initially provide clearing services for contracts involving credit-default swap indices, which typically have more standardized terms than swap contracts for individual bonds. It is expected to eventually expand its offering to include other
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derivative indices as well as the multitude of single name and coporate derivaties. 3) Brazilian Mercantile and Futures Exchange(BMFEX): Founded on August 23, 1890 by Emilio Rangel Pestana, the "Bolsa de Valores de São Paulo" (São Paulo Stock Exchange, in English) has had a long history of services provided to the stock market and the Brazilian economy. Until the mid-1960s, Bovespa and the other Brazilian stock markets were state-owned companies, tied with the Secretary of Finances of the states they belonged to, and brokers were appointed by the government. After the reforms of the national financial system and the stock market implemented in 1965/1966, Brazilian stock markets assumed a more institutional role. In 2007, the Exchange demutualized and become a for-profit company. In 1990, the negotiations through the Sistema de Negociação Electronic a CATS (Computer Assisted Trading System) was simultaneously operated with the traditional system of "Pregão Viva Voz" (open outcry). Currently, BM&FBOVESPA is a fully electronic exchange. In 1997, a new system of electronic trading, known as the Mega Bolsa, was implemented successfully. The Mega Bolsa extends the potential volume of processing of information and allows the Exchange to increase its overall volume of activities. 4) Minneapolis grain exchange(MGC): It was formed in 1881 as a regional cash marketplace to promote fair trade and to prevent trade abuses in wheat, oats and corn. MGEX has been the principal market for Hard Red Spring Wheat (HRSW) since 1881, offering futures and options contracts based on its unique commodity. Futures are traded exclusively electronically on the CME Globex platform. Options are traded side-by-side. HRSW is one of the highest-protein wheat’s. It is found in bagels, high-quality breads and cereals. It is planted mostly in the U.S. Northern Plains and the Canadian Prairies. MGEX offers five financially settled agricultural index products: Hard Red Spring Wheat Index (HRSI), Hard Red Winter Wheat Index (HRWI), Soft Red Winter Wheat Index (SRWI), National Corn Index (NCI) and National Soybean Index (NSI).
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In 1883, the Chamber of Commerce introduced its first futures contract: hard red spring wheat. By 1946 "Chamber of Commerce" had become synonymous with organizations devoted mainly to civic and social issues. In 1947, the exchange was renamed the Minneapolis Grain Exchange. Today the exchange is most recognized by its logo and uses MGEX as first reference. On December 19th, 2008, the Minneapolis Grain Exchange ceased operations of the open out-cry trading floor, but continues daily operations for the electronic trading platform. Today, HRSW futures trade exclusively electronically and options trade side-by-side. 5) Multi commodity exchanges(MCX): It is an independent commodity exchange based in India. It was established in 2003 and is based in Mumbai. The turnover of the exchange for the period Apr-Dec 2008 was INR 32 Trillion. MCX offers futures trading in Agricultural Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils & Oilseeds, Energy, Plantations, Spices and other soft commodities. MCX has also setup in joint venture the National Spot Exchange a purely agricultural commodity exchange and National Bulk Handling Corporation (NBHC) which provides bulk storage and handling of agricultural products. 6) National commodities and derivatives exchange(NCDEX): It is an online commodity exchange based in India. It was incorporated as a private limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It has commenced its operations on December 15, 2003. NCDEX is a closely held private company which is promoted by national level institutions and has an independent Board of Directors and professionals not having vested interest in commodity markets. 7) National multi commodities exchange (NMCE): The first De-Mutualised Electronic Multi-Commodity Exchange of India granted the National status on a permanent basis by the Government off india and operational since 26 November 2002. In response to the Press Note issued by the Government of India during May'1999, first state-of-the-art demutualised multi-commodity Exchange, National Multi Commodity Exchange of India Ltd. (NMCE) was promoted by commodity-relevant public institutions, viz., Central Warehousing

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2008. metals. National Institute of Agricultural Marketing (NIAM). The Physical Grain Market of the BCR is the most important in Argentina in terms of its volume of operations. The region around Rosario contains more than 80% of the vegetable oil industry of Argentina and its ports. and Neptune Overseas Limited (NOL). NYMEX Holdings. National Agricultural Cooperative Marketing Federation of India (NAFED). The parent company of the New York Mercantile Exchange. 2006. for financial products such as exchange rate and interest rate options. Inc (COMEX) which were once separate but are now merged. under the ticker symbol NMX. became listed on the New York Stock Exchange on November 17. The prices quoted for transactions on the exchange are the basis for prices that people pay for various commodities throughout the world. located in New York City. in more recent times. Argentina. 8) New York mercantile exchange(NYMEX): It is the world's largest physical commodity futures exchange. Gujarat Agro-Industries Corporation Limited (GAICL). agricultural products and their by-products. The Rosario Futures Exchange (ROFEX) has traditionally been a futures exchange for commodities and. for $11. Chicago based CME Group signed a definitive agreement to acquire NYMEX Holdings. Its two principal divisions are the New York Mercantile Exchange and Commodity Exchange. Its negotiated volume 76 . and provides reference prices for the national and international markets. Inc. especially soybean. Gujarat State Agricultural Marketing Board (GSAMB). (Rosario and San Lorenzo-Puerto San Martín). Inc. On March 17.Corporation (CWC). as well as securities and other assets. The New York Mercantile Exchange handles billions of dollars worth of energy products. Most of the country's production of cereals and oilseeds is traded within it.2 billion in cash and stock. oilseed. 1884. Founded on August 18. handle more than 90% of the Argentine export of soybean and its derivatives. it serves as a forum for the conduct of trade negotiations in several markets including grain. and other commodities being bought and sold on the trading floor and the overnight electronic trading computer systems. in the Province of Santa Fe.. 9) Rosario board of trade(ROFEX): It is a non-profit making association based in Rosario. Inc.

The Exchange provides a transparent forum for all trading activity and as a result helps to ‘discover’ what the price of material will be months and years ahead. the London Metal Exchange is the world’s premier non-ferrous metals market. 10) London metal exchange: Established for over 130 years and located in the heart of The City of London.9 million lots.41 trillion annually and $29 billion on an average business day.(especially in forward contracts over dollars) makes ROFEX the largest futures market in the country. steel and plastics. This helps the physical industry to plan forward in a world subject to often severe and rapid price movements. equivalent to $7. The LME is a highly liquid market and in 2009 achieved volumes of 111. Based in London the LME is a global market with an international membership and with more than 95% of its business coming from overseas. 77 . Such is the liquidity at the Exchange that the prices ‘discovered’ at the LME are recognized and relied upon by industry throughout the world. It offers a range of futures and options contracts for non-ferrous & minor metals.

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