Introduction
The commodity trade in the Chicago market started out as a way to deal in agriculture Product. Today the CBOT supports the trading of four products types, agriculture, metals, Interest rate the Dow index. In general, to create an attractive trading market for a Commodity, its future price must be somewhat uncertain. It is this uncertainty that creates an opportunity for profit, thereby increasing speculator interest.
Investors may trade commodities for either speculative purposes or as a hedge against a Future price change. People familiar with stock-trading techniques may be curious about this investment option too. But as we’ll explain later on, the strategies and risks associated with Commodities are quite different than common stocks.
In this article, we’re going to provide an introduction to commodity trading. We’ll start by talking about the history of the commodities market. Then we’ll run through the various types of contracts investors can buy. We’ll finish by talking about futures contracts in more detail, as well as some of the hedging strategies used by individuals that trade commodities.
The commodities trade in the Chicago market started out as a way to deal in agricultural products. Today, the CBOT supports the trading of four product types: agricultural, metals, interest rates, and the Dow Index. In general, to create an attractive trading market for a commodity, its future price must be somewhat uncertain. It is this uncertainty that creates an opportunity for profit, thereby increasing speculator interest.
Trading Commodities
The commodities trade in the Chicago market started out as a way to deal in agricultural products. Today, the CBOT supports the trading of four product types: agricultural, metals, interest rates, and the Dow Index. In general, to create an attractive trading market for a commodity, its future price must be somewhat uncertain. It is this uncertainty that creates an opportunity for profit, thereby increasing speculator interest.
Agricultural Commodities
Farming products such as corn, soybeans (meal and oil), ethanol, oats, wheat, and rice are examples of agricultural commodities. Trading in these products is standardized in both quantity as well as condition. For example, agricultural products are traded in a raw / unprocessed state.
Metal Commodities
The most common metal commodities are gold, platinum and silver. The price of these metals is stated in dollars per ounce. The most familiar trading quantities on the CBOT include:
• 100 ounce Gold Futures
• Mini-Sized Gold: 33.2 fine troy ounces of gold
• 5,000 ounce Silver Futures
• Mini-Sized Silver: 1,000 troy ounces of silver
Dow Futures
The Dow Jones AIG Commodity Index, the Dow Jones Industrial Average Futures, and the mini-sized Dow make up the Dow futures. The strategy of trading in Dow futures is also called “trading the markets.” With Dow futures, the investor attempts to predict the future direction of the stock market, and the Dow specifically.
Interest Rates
The last product type offered by the CBOT falls into the category of interest rates. The most common of the interest rate trades include Treasury bonds, fed funds, and municipal bonds. When trading in the interest rate market, the investor is attempting to capitalize on the long and short term changes in the yield curve. Said another way, the investor is taking a financial position that interest rates are going to rise or fall in the future.
Other Commodities
There are many other commodities that can be traded from tin to coffee beans, or stock indexes to pork bellies. As long as there is uncertainty around the future price of these items, there will be an interest in trading. As long as price movement exists, investor interest exists.
Commodity Exchanges
In today’s world of specialization, domestic and international commodity exchanges have latched onto the concept of focusing in an area of expertise. The most robust exchanges in the world today, and their specialty commodities include:
• New York Board of Trade (NYBOT): includes the trading of coffee, cocoa, cotton, orange juice and sugar. (Now a part of ICE.)
• New York Mercantile Exchange (NYMEX): specializes in energy products such as crude and heating oil, gasoline, natural gas, coal, propane as well as metals such as gold, silver, platinum, copper, aluminium, and palladium. (Now a part of CME Group.)
• Chicago Board of Trade (CBOT): specializes in bonds and more traditional commodities such as corn / maize, oats, rough rice, soybeans, soybean meal, soybean oil, and wheat. (Now a part of CME Group.)
• Chicago Mercantile Exchange (CME): specializes in bond futures and more traditional commodities such as live and feeder cattle, lumber, beef, boneless beef trimmings, lean hogs, frozen pork bellies, fresh pork bellies, milk, and butter. (Now a part of CME Group
Statement of problem
A study on Awareness of commodity trading among MBA Students of Kristu Jayanti College.
Review of literature
Prof Gurbandini Kaur
All India Management Association (AIMA)
A commodity exchange is defined as a market were buyers and seller’s trade commodity linked contracts on the basis of terms and conditions laid down by commodity exchange. At present, there are 23 exchanges operating in India and carrying out future trading activities in as many as 146 items. As per the recommendation of the forward market commission, the government recognised the national commodity exchange, Ahmedabad multi commodity exchange and national commodity and derivative exchange, Mumbai as nationwide multi commodity exchange. In an emerging market context in India, the growth of capital and commodity future market would depend on effectiveness of derivatives in managing risk.
However, reviews of literature on commodity future markets indicates that while there h been research on technical questions, the research has had inefficient economic content.
Objectives of the Study:
• To study and analyse the awareness of commodity trading among MBA students.
• To, study the attitude of the students about the commodity trading.
• To identity the factors that motive the students to learn the term commodity trading.
Hypothesis
NULL HYPOTHESIS:
“There is no positive and significant relationship between awareness of commodity trading among MBA students”.
ALTERNATIVE HYPOTHESIS:
“There is positive and significant relationship between awareness of commodity trading among MBA students.
Methodology:
Data sources
Primary Data:
The primary data was collected from the respondent by administering a structured questionnaire and also observation and discussion with management.
Tools for data collection:
• The tools used for data collection is Questionnaire and NET Online.
SAMPLE POPULATION:
There are totally 120 MBA students in the Kristu Jayanti College
SAMPLE SIZE:
Out of the total strength the sample taken is 30.
SAMPLING AREA:
The research was conducted at Kristu Jayanti College Bangalore.
SAMPLING METHOD:
The research was made by the survey in accordance to the convenience of the students, it is descriptive survey type.
Plan of Analysis:
Chi square.
SCOPE OF THE STUDY:
• Future Research on major commodity can be done
• Other issues like if commodity future market is fairly priced or not can be studied.
Limitation of the study:
• The sample size of the study is limited.
• The study is based on required information only.
• The study is limited to MBA students only hence it may not give accurate result.