Commodity trade, international commodity trade. These products are raw or partially refined materials, whose value mainly reflects the cost of their research, collection, or harvest. They are marketed to be processed or incorporated into finished products. Examples include crude oil, cotton, rubber, grains, metals, and other minerals.
Manufactured goods like machinery and clothing, on the other hand, include products whose value largely reflects the cost of the manufacturing process. low brokerage commodity trading These manufacturing processes add relatively little to the value of primary products that are minimally processed before being marketed.
Commodities and commodity markets are terms used synonymously with commodities and markets for those commodities.
Primary Commodity market
Trading in commodities can take the form of normal exchange of commodities for money, as with any day-to-day transaction (technically called "real" trading), or it can be done through futures contracts. A futures contract is an agreement to deliver or receive a certain quantity of a commodity at an agreed price at a specified time in the future. commodity trading time in India Trade-in real products have declined dramatically and in many cases (such as the Liverpool cotton and grain markets) has stagnated.
How the market works
Most of the trade in goods is in the form of future delivery contracts. The purpose of futures trading is to hedge against the risk of price changes (hedging) or to make a profit by speculating on price movements. The Green India Commodity When a speculator believes that prices are going to rise, he buys a futures contract and sells it if he wishes (for example, at a distant delivery date). The speculator wins (if prices have risen) or loses (if prices have fallen), the difference is due to the price change.
The operation of futures markets requires products of uniform quality levels so that transactions can take place without the buyer having to inspect the products himself. This explains why there is no future market for tobacco, for example, whose quality varies too much. A constant and non-fluctuating supply is also necessary; This is technically known as "low elasticity of delivery," which means that the quantity of a product that manufacturers supply to the market is not significantly affected by the price at which they can sell the product. The
best commodity trading broker in India could adjust supply relatively quickly to changes in demand, speculation would become too difficult and risky because the unusually high or low prices that speculators could profit from are eliminated once supply adjusts. Monopoly control of supply and demand is also unfavorable to the functioning of a futures market since the price is largely under the control of the monopolist and therefore probably does not fluctuate enough to allow the speculator to make a profit. For example, there is no market for diamonds because there is only one marketing cooperative. In 1966, the London lacquer market ceased to function after the Indian government took control of prices from exporters at the source.
The terms of trade
Economists have long been fascinated by the relationship between the price of primary products and that of manufacturers. The relationship is known as the "terms of trade" and can be defined as the relationship between the average price of exports of a country or group of countries and the average price of its imports. commodity exchange in India The long-term evolution of trade conditions between primary and industrial products has been the subject of diametrically opposite conclusions: some theorists believe that the trend is favorable for less developed countries, others unfavorable. Incorrect statistical materials and methods in different countries are responsible for this mismatch.
Comparison of trading conditions over a long period is very difficult and can be misleading as the pattern of trade and the quality of the product groups examined change. Many economists believe that trading conditions in less developed countries were unfavorable between 1870 and 1938. They note that as technological progress increases in industrialized countries, they tend to require relatively fewer primary products. Therefore, a downward influence is exerted on the prices of primary products. Another factor is that in developed countries the benefits of progress are not reflected in lower prices but higher wages. Together with inflationary pressures, this means that the prices of industrial products produced by developed countries tend to rise steadily.
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