Transcript of "Trading soybean in commodity market"
INTRO Soybean – most economically important bean in the world. SOY OIL - 17 to 18% SOYBEAN SOY MEAL – 82 to 83% Soy oil – Second largest source of vegetable oil. Soy meal – 85% of the world’s protein feed demand. A Premium product High digestibility, high energy content.
GLOBAL SCENARIO Annual global production 210 – 230 mt. 55 to 58% of total global oilseed output. Annual global trade: * Soy bean 70 – 80 mt * Soy oil 9 mt * Soy meal 52 mt.
Major Major Major Producers exporters importers• U.S (70- • U.S.A (30- • China (35- 80mt) 35 mt) 40mt)• Brazil (55- • Brazil (23- • EU 60mt) 28mt) (5-16mt)• Argentina • Argentina (32-48mt) (5-15mt)• China (14- 16mt)• India (8- 10mt)
INDIAN SCENARIO Annual production 8.5 – 10mt In 2009-2010 8.9mt. Area 11 million hectares. Major cultivators: * Madhya Pradesh 60% * Maharashtra 25% * Rajasthan 6-7% * Andhra Pradesh 1-2%
India is highly dependent on imports to meet domestic edible oil requirement. However, India out of its total soy meal production of around 6.5 to 7 million tonnes, exports around 3.5 million tonnes with Vietnam, Japan, Thailand, Indonesia, Greece being its major importers.
INDIA IN WORLD SOY INDUSTRY (2009-2010) GLOBAL INDIA( MT) % SHARE (MT) (MT)Soybean production 225.3 7.9 3.5Soy Oil production 37.5 1.2 3.2Soy Oil imports 10.0 1.6 16.0Soy Oil exports 9.0 0 0Soy oil consumption 37.5 2.8 7.5Soy Meal 160.3 5.4 3.4productionSoy Meal exports 56.0 3.5 6.3Soy Meal imports 52.0 0 0Soy Meal 159.2 1.9 1.2consumption
WORLD SOY MARKETS Chicago Mercantile Exchange, which acquired Chicago Board of Trade - the worlds oldest soy futures market. Dalian Commodity Exchange - trades the most liquid soybean contracts in the world. Argentina and Brazil - determine the physical prices
MAJOR TRADING CENTRES Indore, Ujjain, Dewas, Mandsore in Madhya Pradesh, Akola, Sangli, Nagpur in Maharashtra, Kota in Rajasthan.
FACTORS INFLUENCING MARKET Weather at all the producing centers, domestic and international. Competitive crops used for animal feed, viz., maize, jowar, bajra. Government policies such as Minimum Support Price (MSP) fixed for the crop, import duty & export of its derivatives and stock limits, Pests and diseases. Infections affecting poultry and cattle like bird flu.
Contd.., Demand for Soybean from Oil extractors and Farmers. The crush margin between meal, oil and seed. The supply-demand and price scenario of competitive oils, viz. palm oil. International soy price movement at CBOT. International market price for soy meal export
CONTRACT SPECIFICATIONS SOY BEAN A : Contracts expiring in the months of September, October, November, December and January. SOY BEAN B: Contracts expiring in the months of February, March, April, May, June, July and August.
TYPE OF CONTRACT Futures contractNAME OF COMMODITY Soy BeanTICKER SYMBOL SYBEANIDRTRADING SYSTEM NCDEX Trading systemBASIS Ex-warehouse IndoreUNIT OF TRADING 10 MT
DELIVERY UNIT 10 MTMAXIMUM ORDER SIZE 500 MTQUOTATION/BASE VALUE Rs per quintalTICK SIZE 50 PaisaQUALITY SPECIFICATION Moisture - 8 to 10% Foreign matters – 2 to 4% Damaged seed – 2 to 5% Green seed – 7%QUANTITY VARIATION +/_ 2%
DELIVERY CENTER IndoreADDITIONAL DELIVERY Akola, Nagpur(Maharashtra),CENTRE Itarsi, Sagar(MP) and Kota(Rajasthan).TRADING HOURS Mondays through Fridays :10:00 AM to 5:00 PM. Saturdays : 10:00 AM to 2:00 PMDUE DATE/EXPIRY DATE 20th day of the delivery monthDELIVERY SPECIFICATION The sellers should give their intention to give delivery at least 5 days before the maturity of the contractDELIVERY LOGIC Seller’s Option
CLOSING OF CONTRACT All outstanding positions will be closed out at the final settlement priceOPENING OF CONTRACTS Trading in any contract month will open on the 10th day of the monthPRICE LIMIT Daily price fluctuation limit is +/_ 3%FINAL SETTLEMENT PRICE Simple average of spot prices of last three days.POSITION LIMITS Member level: 1,50,000 MT Client level: 30,000 MT
CONTRACT LAUNCH MONTH CONTRACT EXPIRY MONTHMarch 2011 August 2011April 2011 September 2011May 2011 October 2011June 2011 November 2011July 2011 December 2011August 2011 January 2012September 2011 February 2012October 2011 March 2012November 2011 April 2012December 2011 May 2012January 2012 June 2012February 2012 July 2012March 2012 August 2012April 2012 September 2012May 2012 October 2012June 2012 November 2012July 2012 December 2012