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Transcript

Nature of commodity markets

By: Gaby, Besjane and Tsotlhe

Main prospects and problems of given commodity

Outline

  • What is commodity and why
  • Nature of commodity
  • Main producers and consumers
  • Geography and volumes of international trade flows
  • Nature of commodity market price

Nature of commodity market price formation and regime

Geography and volumes of international trade flows

Non-fundamentals

  • Financialization –combination of derivative products such as index
  • fund and ETFs
  • During the boom period there was a rapid growth of open interest in futures exchanges market by non-commercial speculators
  • As well as the popularity of net long positions by institutional investors in commodities indexes
  • Boom and bust are intesify by unexpected inflows and outflows

Main producers and consumers

  • Russia: Average production per day: 10.5 million barrels a day
  • Saudi Arabia:Average production per day: 10 million barrels a day
  • United State of America: Average production per day: 9.2 million barrels a day
  • Iraq:Average production per day: 4.3 million barrels a day
  • China: Average production per day: 4.1 million barrels a day

Nature of commodity

What is commodity and why

  • The Parties shall enter into exchange shall be: a buyer or a seller
  • Each Party shall have an interest in buying or selling something that would interest another Party.
  • Each Party shall be free in making proposals or reject the other.

  • A market where commodity products are exchanged.
  • A place for buyers and sellers trading raw or primary products.
  • Raw materials that are into products then traded.

  • Promoting commodity actors.
  • Improving and encouraging business partners.
  • Providing legal, financial, insurance, control service.

THANK YOU FOR YOUR ATTENTION

Geography and volumes of international trade flows

Nature of commodity market price

Main producers and consumers

Fundamentals

• Prices are defined by the interaction of supply and demand which are known as the Fundamental analysis.

• Which helps you to estimate a market price for commodities by using the law of supply and demand

• This Fundamental analysis helps us to analyze commodities and predict where the prices of commodities need to be trading and what they will do in the future.

• Long boom of 00s due to increase in demand for commodities from China

and other emerging economies.

• Supply and Demand of oil are inelastic in the short-run

Main consumers per day

  • United states: 19 million
  • China: 10.5 million
  • Japan: 4.5 million
  • India: 3.7 million
  • Russia: 3.5 million

ECG

62

bpm

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