Commodity Blues

nanabala · #1 29th August 2006, 03:42 PM

Dear All,

I would like to post following issues for which you can share your views.

1. When Commodity Exchanges are meant for Price Discovery, why should Goverment control the prices ?

2. I am of the opinion that Farmers benefit a lot from exchanges as it has been quite apparent that Prices have shot up(?) considerably. Dont you think so?

3. There are many complaints that Many physical traders suffered huge losses by trading (Speculating?) in Commodities. I am of the view that instead of hedging their physicals, these traders must have duplicated their physical holdings by keeping 10% margins. If the markets shot up they must have made double profits (Both Physical and Online and If they are in losses they must have made double losses.... If this is the case, why should one blames online trading?

4. Now Govt Wants to control prices of essential commodities through Imports. The basic fact is that nowhere these essential commodities are available cheaper than India. In this scenario, Instead of importing, Govt Agencies like NAFED, MMTC etc shall SELL Future contracts (Short positions). With 10% margins they can control the prices. Infact it improves liquidity in exchanges... What do you say?

5. My genuine doubt is how many of you made money in Margin Trading with huge exposures. I want to know returns in % terms. I know few people who made 40% returs with religious stoplosses. They have escaped from April 20th Silver Craaash and June 28th Agri Craaaash with religious stop losses....

Keep Sharing your views..

Happy Trading
Nanabala
9986039019
Bangalore

vkmishra · #2 2nd September 2006, 01:58 PM

You have made a very valid presentation of your view.
I would further like to add to this discussion.

1. There are three kinds of players in our Indian Commodities Market.

a) Commodity Traders ie. persons already in that particular trade. Those knowing that particular commodity and its market. Knowing its cycles and having access to Physical Deliveries.

b) Professional Traders ie. Those who earn their living from trading only. Those who understand derivatives, leveraging, stock markets. They follow Systematic Trading Plans, have stop losses, follow Technical Analysis, etc.

c) Retail Investors, All other persons other than the above 2 categories are retail, whether wealthy or not, whether HNI or otherwise. They do not do their own analysis. They are followers, blind follower, the worst kind for this market.

Commodity Traders and Professional Traders, may make some money or may limit their losses. However, the Retail Inv. are the ones who are losing all their money.

THE STOCK MARKET IS A INVESTORS MARKET, BUT THE COMMODITY MARKET IS A HEDGERS MARKET.

Thus, the strategic approach to both the markets is totally different.

THE STOCK MARKET IS ALREADY DEVELOPED AND MATURE, AND THAT NOW THE 'A' GRADE SCRIPS ARE NOT TO BE EASILY MANIPULATED.
HOWEVER, THE COMMODITY MARKET IS STILL IN THE DEVELOPING STAGE AND THE AGRI COMMODITIES ARE COMPLETELY BEING MANIPULATED BY THE BIG OPERATORS.

Will continue, on this subject if readers are interested.

Cheers

nanabala · #3 6th September 2006, 01:13 PM

Dear All,

Now we have come to a crucial juncture where all Essential Commodities hit highs with out any exception. Earlier, Govt. has come up with all possible ways of reduction of Import Duties, Position Limits, giving powers to States against illeagal Hoarding etc. As for as my knowledge goes, Govt. has done all. The only way before Govt. is to encourage Dryland farming and encourage distribution of Minor Millets through PDS. Lest, God only should save the Poor man. Why poor men, Even the Common Man has to shell out heavily for Daily Consumption........

Now, It's interesting to see what Govt. is going to do to control Inflation. Govt has one positive factor in the form of Crude Oil Cool Off..... Now lets see.

We have reports which say, after this Global Agri Season, The world has Food Grains stocks enough for 57 days. This situation was there only in 1972 when Prices of Food Grains have doubled. Now we are at very crucial Juncture.

Let's See what happens to the Prices of Essential Commodities. Let us not blame Futures Market for the Price Rise. It has been doing it's own function of Efficient Price Discovery. Only problem was The Govt delayed analyzing the Price Discovery Efficiently.

Happy Trading
Nanabala
9986039019
Bangalore

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