100-nov2019.pdf

A LITERATURE REVIEW ON AGRICULTURAL AND NON-AGRICULTURAL
COMMODITIES: EVIDENCE FROM MCX (MULTI COMMODITY EXCHANGE)
* Priyanka. L, Research Scholar, Department of Business Administration,
Annamalai University, Tamil Nadu, India.
** Dr.A.A.Ananth, (Corresponding author) Professor, Department of Business
Administration, Annamalai University, Tamil Nadu, India.
Abstract
The India Commodity showcase has experienced loads of changes because of the
changing worldwide monetary situation; hence hurling numerous open doors all the while.
Commodities despite whether or not they are known with nourishment, vitality or metals, are
a major piece of standard daily existence. Commodities can be a significant method to
broaden a portfolio past conventional protections – either as long as possible or as a spot to
stop money during abnormally unstable or bearish securities exchanges, as products
customarily move contrary to stocks. Moreover, there ought to be huge interest and supply of
the item. The market for the item ought to be free from considerable government control and
the product ought to have a long time span of usability and be fit for institutionalization and
degree. The MCX is an India-based holding organization. The MCX Company works as an
electronic commodity futures trade. The MCX is a demutualized trade and is occupied with
web-based exchanging, clearing and settlement activities of product prospects exchanges.
MCX offers futures exchanging crosswise over fragments, including bullion, ferrous and
nonferrous metals, vitality and agricultural items (mentha oil, cardamom, rough palm oil,
cotton, and others The Multi Commodity Exchange of India Limited (MCX) is the world's
biggest trade in Silver, the second biggest in Gold, Copper and Natural Gas and the third
biggest in Crude Oil prospects. MCX is the most productive and financially savvy stage for
price discovery and price hazard management in India's commodity market. The commodities
to a great extent arranged into two primary gatherings agri items and non-agri items. Under
agri items, oats, and pulses, for example, grain, gram, and wheat are exchanged expansion to
filaments, elastic, potato, and sugar. Under non-agri items, steel and copper are significant
items while gold and silver are the major valuable metals items.
Keywords: Commodity market, Agriculture and Non-Agriculture Commodities, Multi
Commodity Exchange (MCX).
A JOURNAL OF COMPOSITION THEORY
Volume XII Issue XI NOVEMBER 2019
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Introduction:
India is one in all the highest manufacturers of a vast variety of commodities running
from farming to non- farming things, with a long history in its exchanging market. These
markets have been encountering high points and low points since its initiation, yet reinforcing
the working our country has been the option to carry a level of strength to the commodity
market. It has been advancing as far as technology, transparency and exchanging movement
with the expulsion of government protection from various commodities. This activity of our
government has accordingly, permitted the market powers, for example, supply and demand,
to rule the commodity.
One of the highest manufacturers of agricultural commodities in India. The
commodity market in India is as previous because it is in the USA and UK. The markets have
been confronting ups and downs since starting yet the nation is effectively getting level of
steadiness in the commodity market with advancing innovation and transparency. Market
powers of interest and supply rule the commodity market. Commodity market that features
exchange a vital phase of the economy. Commodities are characterized into two sorts: Soft
commodities and hard commodities. Soft commodities are agrarian products, for example,
Sugar, coffee, cocoa, wheat, and fruit. Hard commodities are commonly mined, for example,
oil and gold. The most established method of exchanging and putting resources into
commodities is through futures contracts which means purchasing or selling a hidden
resource at a foreordained cost on a predetermined time in the future. Future contracts are
verified by physical resources. Trading in the commodity market should either be possible
physically or through derivatives utilizing spot prices, options, forwards and futures. Farmers
for the foremost half utilize by-product commercialism within the commodity market for
coping with the worth modification dangers. Trading in goods derivatives/futures on the
exchange stage is an instrument to accomplish price discovery and higher price hazard
management aside from serving the macr0 economy with the better quality designation.
Black pepper:
Black pepper (Piper nigrum.) “King of Spices” is broadly known as “Black Gold”.
Naturally, Pepper is a woody climbing vine and grows up to tallness or length of 10 meters.
The business some portion of the plant is the organic product (Pepper berries). It is
additionally the most significant spice exchanged globally, representing somebody third of
the total volume and estimation of spices trade. This black spice is the most important
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agrarian commodities of business and exchanges India since the pre-memorable period.
Kerala and Karnataka represent the dominant sector of the entire Indian pepper generation.
The worth chain members use the MCX Pepper futures exchanging platform to guarantee
compelling value finding and value hazard hedging. India significantly imports Pepper from
Vietnam, Sri Lanka, and Indonesia and periodically from Brazil. Some measure of imported
Pepper is additionally utilized for making esteem included products like oleoresins, pepper
powder and so forth.
Cotton:
The utilization of cotton for texture is known to date to ancient occasions; pieces of
cotton texture dated from 5000 BC have been unearthed in Mexico and the Indus Valley
Civilization. The cotton industry was very much created and few strategies utilized in cotton
turning and fabrication kept on being utilized until the Indian industrialization. Somewhere
in the rage of 2000 and 1000 BC cotton got far-reaching crosswise over quite a bit of India.
Cotton is basically developed for its fiber, which is utilized the world over to make the
material. Cotton fiber is the most important material strands, representing around 35% of the
world's complete material fiber utilized. At the point when what's to come is obscure, current
methods and techniques, including market-based risk management monetary instruments like
‘Cotton Futures’, offered on the MCX stage can improve efficiencies and solidify
aggressiveness through price risk management.
Cardamom:
The inceptions of cardamom are obscure, yet it is accepted that it developed as wild
herbs in the rainstorm forests of the Western Ghats in southern India. Cardamom discovers its
first notice in the Charak Samhita (an early book on Ayurveda) composed somewhere close
to the second century BC and second century AD. The Charak Samhita tells that cardamom is
a significant constituent in numerous meds. India is a significant maker and buyer of
cardamom, holding the second spot in world creation; Guatemala taking the top opening.
Cardamom is broadly utilized as spice, eminent for its flavour and smell. Given an unsure
future, present-day systems and procedures, including market-based risk management
financial instruments, for example, ‘Cardamom Futures’, offered on the MCX stage can
improve efficiencies and combine aggressiveness through value chance the broad.
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Mentha oil:
Mentha is a sweet-smelling herb, which likewise passes by the name Japanese pudina
in India. Mentha arvensis was first presented in India a while somewhere in the range of
1958 and 1964 by the Regional Research Laboratory, Jammu Tawi. By 1996, India was
creating 6000 tonnes of mentha oil and outperformed 45,000 tonnes in 2013, as per exchange
sources. A great part of the expansion of mentha oil creation, especially its fares, came in
after 2004, after the presentation of futures contracts dependent on mentha oil as the
fundamental. India is the biggest maker and exporter of mentha oil and its derivatives.
Mentha oil costs have consistently been quite unstable. Over the most recent couple of years,
India has developed as a fare centre point for mentha oil and its derivatives, presenting
exporters to significant expense instability. Due to the nearness of a liquid futures contract on
MCX, the worth chain members can fence this value chance on the MCX stage.
Gold:
Gold is the most established valuable metal known to man and for a huge number of
years, it has been esteemed as a worldwide currency, a commodity, an investment and just an
object of excellence. Gold, the most looked for after every valuable metal, is obtained all
through the world for its excellence, liquidity, venture characteristics, and mechanical
properties. Gold has a long and entrancing use history in a differing scope of enterprises and
applications. Gold is a material of decision in medication and dentistry as it is biocompatible.
As of late, it has risen as a key nanomaterial. Worldwide interest for gold is focused on four
essential classifications: gems, venture, central bank reserves, and innovation. Present-day
supporting systems and methodologies, including market-based risk management financial
instruments, for example, gold futures, can improve efficiencies and combine intensity.
Silver:
Silver is a splendid dark -a white metal that is delicate and pliable. The mining of
silver started somewhere in the range of 5000 years back, with the primary mine being in
Anatolia (modern-day Turkey). Simply over a portion of the mined silver originates from
Mexico, Peru, China, and Australia, the four biggest delivering nations. Essential mines
produce around 33% of the world silver, while around 66% come as a side-effect of gold,
copper, lead, and zinc mining. In Central Asia, Tajikistan is known to have probably the
biggest silver stores in the world. Together, these three areas speak to over 95% of the yearly
silver demand. With novel properties, including its quality, pliability, and flexibility; it’s
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electrical and warm conductivity; its affectability to and high reflectance of light; and the
capacity to persevere through outrageous temperature; it is a component without substitution.
Business-grade fine silver is at any rate 99.9% unadulterated, and purities more prominent
than 99.999% are accessible.
Base metals:
Metallurgy is the significant applied sciences with a history going back to 6000 BC.
Today, there in excess of 85 metals known to people. In science, the term base metal casually
alludes to a metal that oxidizes or consumes generally effectively and responds dynamically
with weakened hydrochloric corrosive to frame hydrogen. It is a typical and reasonable
metal, rather than a valuable metal. Synthetic, physical and stylish properties of the metal
make them the flavoured fixings in a broad scope of household, mechanical, and innovative
applications. The Indian metal industry, blessed with gigantic stores of normal assets in
minerals like copper, chromite, iron metal, manganese, bauxite, and gold, got a significant lift
during the 1990s with the beginning of progression and open-market strategies. With bigger
ventures and innovative advances pouring in, the yield of the business has expanded thus has
the nature of the items.
Energy:
Of the various types of energy, unrefined petroleum and natural gas consolidated
serenely establish the greater part of the complete essential vitality devoured in 2014.
Because of its high vitality thickness, simple transportability, and relative plenitude. In any
case, oil was first utilized monetarily during the 1850s when Ignacy Łukasiewicz found the
procedure to distill lamp oil from seep oil (petroleum seeps) that gave a less expensive choice
to whale oil. The demand for oil as fuel at that point immediately developed; promoting the
world's first business oil well in Poland in 1854, build by Łukasiewicz. Strikingly,
Lukasiewicz is additionally credited with the development of the lamp fuel light (1853) and
the presentation of the first street lamps' primary road lights in Europe (1853).
Natural gas, a flammable blend of hydrocarbon gases is to a great extent known for its
spotless and safe wellspring of energy. As ahead of around 500 BC, the Chinese found the
capability of gaseous petrol leaking through the world's surface. They utilized it to bubble
ocean water, isolating the salt and making it drinkable. Around 1785, Britain turned into the
primary nation to popularize the utilization of natural gas; gaseous petrol created from coal
was utilized to beacons just as streetlights.
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Objectives of the Study:
1. To know the agricultural and non-agricultural commodities on MCX.
Review of Literature:
Harsheet Kaur Chawla (2019) contemplated a review of the Indian Agricultural
Commodity Market. It talks about different agrarian commodities being exchanged and the
exhibition of Agricultural Commodity Market in India and the different changes in the
market in recent years. The future of agricultural commodities looks rather unsure, however
with the innovation, there will be, there can be a great expected, particularly as far as the
arrangement of exchanging.
Hariharan and et.al. (2018) examined the Indian commodity market. This study centres on
understanding the dynamic development in the commodity market which has seen a
noteworthy change in the previous decade. The commodity market is additionally an elective
alternative for a financial specialist who isn’t content with the equity market. In India, over
70% of populations rely upon agricultural commodities. Commodity futures markets are a
vital part of a program for farming progression. The present paper is completed with the
deference of every one of the six National level commodity exchanges in India to be specific
NMCE, Ahmadabad; MCX, Mumbai; NCDEX, Mumbai; ICEX, Mumbai; ACE,
Ahmadabad; and UCX, Mumbai. These trades are assuming a significant job in the
exchanging exercises India.
Prabhakar Rajkumar (2017) concentrated paper centers on the development and execution
of the Agricultural commodity market in Multi Commodity Exchange in India for the time of
2012 to 2016. This examination has been done utilizing the auxiliary information.
Commodity markets have a pivotal job in creating agribusiness ruled economies. The present
examination is to consider the accompanying agricultural ruled commodities trade volumes
and exchange esteem like Cardamom, Cotton, Crude Palm Oil, Kapas, Guar, almond, Chana,
Flakemonth in Multi Commodity Exchange from 2012-2016. In any agribusiness ruled
economy, similar to India, the farmers face yield chance as well as value chance also.
Commodity futures have a significant task to carry out in the price risk management
procedure, particularly in farming.
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Bhagwat, S (2016) examined the Commodity Market V/S Multi Commodity Exchange of
India Limited (MCX). The present investigated is a directed commodity market in India with
exceptional reference to Multi Commodity Exchange (MCX). This study is based on
secondary data, and the data were collected from journals, websites of commodity market
bulletins, and annual reports of Forward Markets Commission (FMC). The different reports
and records issues and kept up by the Government of India are additionally utilized in the
investigation. The targets of the investigation are to examine the Development of MCX India
Limited and to break down the Performance of Multi Commodity Exchange of India Limited.
Nidhi Rajendra Bisen (2016) analysed the existing literature of the commodity market. The
present examination diagram hypothetical literature the commodity fates market in India. The
past studies in the explorations intend to take note of the perceptions, search and lot more
things done in the past with respect to the inquiry in the hand. From these endeavours,
obviously essential components that impact the market interest of commodities are the key
drivers. These elements incorporate socioeconomics, climate, exchange streams, production
quotas, and export controls. The exploration conveyed so far is uncertain about the bearing of
such an effect. There is a dire need to perceive how the business sectors look into moves from
the degree of merchants to the grassroots, for example, farmers. The exploration of the effect
of commodity prospects futures markets on WCPI likewise needs a driving force.
Maravi (2015) distinguishes that Commodities are characterized into two sections: Soft
commodity and hard commodity. Soft commodity incorporates cardamom, pepper, mentha
oil which are commonly developed. Hard commodities incorporate aluminum, gold, and oil
which are taken out from the ground. There are 113 farming and non-farming commodities
advised for exchanging in the commodity market according to the Act 1952. Agricultural
commodity implies wheat, cotton, flax, forage, apples, grapes, potatoes, timber and forests,
nursery crops, citrus, and other fruits and vegetables, water cultural species (counting,
however not restricted to, any species of finfish, mollusc, shellfish, or another oceanic
invertebrate, amphibian, reptile, sea-going plant spread or raised in a controlled or chose
condition), or some other agricultural commodity, barring put away.
Nilanjana Kumari (2014) propounded that ongoing patterns in the commodity market. The
investigation attempted underneath has been illustrated on the subject of the commodity
markets working in India. These market sectors have been encountering high points and low
points since its beginning, yet with reinforcing the working our nation has been able to carry
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a level of strength to this market. It has been advancing as far as innovation,
straightforwardness and exchanging action with the expulsion of government security from
various commodities. This activity of our government has hence, permitted the market
powers, for example, supply and demand, to manage the product.
Mukhopadhyay and et.al. (2008) in their exploration paper “Building up an Index for
Trading Through Multi Commodity Exchange in India”, inquired about to encourage
business improvement and to make market mindfulness, and led a file named MCX COMAX
for various commodities viz. agricultural, metal and energy exchanged on Multi Commodity
Exchange in India. By utilizing weighted geometric mean of the price relatives as the records,
loads were chosen based on rate commitment of agreements and estimation e of the physical
market. With the weighted number juggling mean of gathering records, the consolidated file
had been determined. It served the purpose of the MCX to make the relationship among
different MCX individuals and their partners alongside the production of reasonable focused
conditions. The commodity trading market had considered this list as a perfect venture
instrument for the assurance of the danger of the two purchasers and merchants.
Conclusion and Discussions:
The present study makes an endeavoured for the literature review of agricultural and
non-agricultural commodities on MCX (Multi Commodity Exchange). Gold, silver, raw
material, gas and so on all hold numerous beneficial open doors for the pattern following
dealer. In Energy Natural gas, another ordinarily exchanged commodity in India is the most
unpredictable item and conveys twofold the yearly hazard as against values. India is
overwhelmingly an agrarian economy, positioning second in farm creation in the world. The
commitment of farming to the country’s GDP declined to under 15 percent in 2012¬–13, and
the agrarian segment gave work to around 52 percent of the workforce. India sends out $39
billion worth of farming items in 2013, making it the seventh biggest agrarian exporter
around the world, and the 6th biggest net exporter, says the USDA. Farming represents about
14.7 percent of the all-out export profit. Plus, products made with the farming raw material
additionally contribute around 20 percent in Indian trades. With exceptionally divided
markets and unstable commodity prices, it is a test to guarantee a 'profitable' cost for the
Indian farmer. Remembering these, the administration presented various changes. With
exceptionally divided markets and unstable ware costs, it is a test to guarantee a 'reasonable'
and 'profitable' cost for the Indian rancher. Remembering these, the administration presented
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various changes. In this, the reinforcing of existing foundations in spot and subordinate
exchange has gotten critical as ware markets do impact the lives of a huge number of partners
in the nation's various and huge commodity systems.
References:
Angad Singh Maravi, A. S. (2015). Performance Analysis of Indian Agricultural Commodity
Market. IRACST – International Journal of Commerce, Business and Management, Vol. 4(2),
PP- 1125-1135.
Bhagwat, S. AND Maravi, A. S. (2016).A Study of Commodity Market V/S Multi
Commodity Exchange of India Limited (MCX). International Journal of Research in
Management, Economics and Commerce, Vol. 6(4), PP- 27-41.
Hariharan. R and Karunakara Reddy. B.A (2018) A Study On Indian Commodity Market
With Special Reference To Commodity Exchange. International Journal of Research Science
and Management (IJRSM), Vol. 5(6), PP – 15-21.
Harsheet Kaur Chawla, Anirudh Padmanabhan and Harsh Dhanuka (2019). Indian
Agricultural Commodity Market. International Journal of Research and Analytical Reviews
(IJRAR), Vol. 6(1), PP – 123-127.
Mukhopadhyay, Arup Ranjan, Pradhan, Biswabrata, and Gupta, Abhijit (2008). Developing
an Index for Trading through Multi Commodity Exchange in India, Journal of management
Research, Vol. 8 No. 3, pp. 168-174.
Nidhi Rajendra Bisen and Rajiv G. Ashtikar (2016). A Study on Existing Literature of
Commodity Market. International Journal of Management Studies, Vol. 3(1), PP -106-111.
Nilanjana Kumari (2014). Recent Trends in Commodity Markets of India. Abhinav
International Monthly Refereed Journal of Research in Management & Technology, Vol.
3(12), PP – 1-6.
Prabhakar Rajkumar K and Thilaga M (2017). A Study on Development and Performance of
Agricultural Commodity Futures Market in Multi Commodity Exchange in India.
International Journal of Recent Scientific Research, Vol.8 (8), PP – 19509-19513.
Ramya. R and Gnanaraj (2016). Commodity derivatives market in India: The Past, Present
and Future. SJCC Management Research Review, Vol. 6(1), PP – 1-13.
Websites:
www.mcxindia.com
www.investopedia.com
www.outlookmoney.com
www.businessline.com
www.shodhganga.com
www.slideshare.com
www.moneycontrol.com
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