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Commodities Briefing - Category | Futures and Options more

Currency derivatives trading gains momentum

Posted on 30 March 2015 by VRS  |  Email |Print

Volumes in the currency derivatives space are up 80 per cent, compared with that at the start of the financial year. So far in March, the average daily volume for all exchanges combined stood at Rs 32,611 crore, compared with Rs 17,012 crore in April 2014. During this period, the open interest, too, has increased four-fold.
Market players attribute the lifting of trading curbs and stability in the currency as reasons for the gradual uptick in volumes seen in 2014-15. “We have seen a huge build-up of option positions. Regular trading interest in the currency derivatives has improved because of the expansion in the positional limits by the RBI (Reserve Bank of India). Volatility in the currency market has also been low,” said Kishore Narne, associate director and head (commodity and currency) at Motilal Oswal Commodity Broker………………………………………..Full Article: Source

The Beginner’s Guide to Natural Gas Futures

Posted on 26 March 2015 by VRS  |  Email |Print

Natural gas is often defined by its utilities. It generates electricity, heats homes, and fuels vehicles. Most investors are aware how natural gas is used. But not everyone understands how natural gas is traded. Today we’re going to break down what natural gas futures are and how they work in the commodities market. Knowing how it’s traded every day lets you understand how it’s priced and how to interpret movements in natural gas futures.
A natural gas future - like all commodities - is a contract obligating the buyer to purchase a specific quantity of natural gas at a future date and price. Delivery dates are set around the 15th day of the following month. Futures are priced per million British thermal units (BTUs) - one BTU is the amount of energy needed to change one pound of water by one degree Fahrenheit………………………………………..Full Article: Source

Currency derivatives’ turnover falls over 33% in February

Posted on 16 March 2015 by VRS  |  Email |Print

Currency derivatives turnover at the nation’s three bourses fell by more than 33 per cent to Rs 4.80 lakh crore during February over the preceding month. The three bourses - NSE, BSE and MCX-SX - together had recorded a currency derivative turnover of Rs 7.21 lakh crore in January 2015, latest data showed.
Currency derivative volumes on the three stock exchanges also plunged by nearly 33.45 per cent to 7.63 crore in February as against 11.46 crore in January, 2015. Currency derivative contracts allow investors to take position on change in the foreign exchange rates between pairs of two currencies, such as rupee and dollar………………………………………..Full Article: Source

Nasdaq Expands Global Commodities Initiative With Energy Derivatives

Posted on 13 March 2015 by VRS  |  Email |Print

Nasdaq announced the establishment of a new energy futures market with the support of leading commodities participants. Nasdaq Futures (NFX) will offer competitive pricing, an innovative clearing solution and high-performance technology for futures and options based on key energy benchmarks including oil, natural gas and US power, which will launch mid-2015 pending regulatory approval.
Nasdaq has secured support from prominent trading firms, inter-dealer brokers, and futures commission merchants (FCMs) to facilitate broad product distribution and early liquidity. Founding market participants include ABN AMRO Group, Advantage Futures, Goldman Sachs, JP Morgan, Morgan Stanley1 and Virtu Financial………………………………………..Full Article: Source

Speculators Continue To Shed Gold Futures But At Slower Pace — CFTC

Posted on 03 March 2015 by VRS  |  Email |Print

Speculative traders continue to be bearish the gold market but the pace of selling appears to be slowing, according to the latest data from the Commodity Futures Trading Commission.
According to the CFTC commitment of traders disaggregated report, futures gold net long positions declined for the fourth straight week, as of Feb. 24. Money-managed speculative gross long positions declined by 4,000 contracts, to 124,595. At the same time, speculative gross short positions increased by 2,205 contracts to 35,108. Gold’s net length now stands at 89,487 contracts………………………………………..Full Article: Source

How to Use Commodity Futures to Hedge

Posted on 26 February 2015 by VRS  |  Email |Print

Futures are the most popular asset class used for hedging. Strictly speaking, investment risk can never be completely eliminated, but its impacts can be mitigated or passed on. (Related: A Beginner’s Guide to Hedging) Hedging through future agreements between two parties has been in existence for decades.
Farmers and consumers used to mutually agree on price of staples like rice and wheat for a future transaction date. Soft commodities like coffee are known to have standard exchange-traded contracts dating back to 1882. Let’s look at some basic examples of the futures market, as well as the return prospects and risks………………………………………..Full Article: Source

How can options trading gain ground in commodities ?

Posted on 24 February 2015 by VRS  |  Email |Print

The commodities futures market underwent changes in 2003 with many policy reversals. But option-based derivatives are yet to gain ground in commodities. Though the Forward Contract (Regulation) Bill, 2010, has provisions for option trading, its execution requires considerable attention from the regulator, commodity exchanges and market participants.
The government can replace the price support scheme with minimum guaranteed price (MGP). Policy makers are passive on the adoption of option-based trading despite the benefits. Option can be over-the-counter and exchange-traded. Similar to the futures, option requires at least two parties to exercise the contract. Exchange-traded option can help to mitigate counter-party credit risk as the contract will be more standardised in nature………………………………………..Full Article: Source

Futures Exchange-Traded Funds

Posted on 19 February 2015 by VRS  |  Email |Print

Investing in commodities has grown more popular in last few years and today they find a place in any well-diversified portfolio. Exchange-traded funds (ETFs) offer multiple benefits like diversification, professional money management of a mutual fund, and real-time trading of a stock listed on an exchange. Commodity ETFs provide an efficient mode of investing and trading commodities and come in three flavors:
Physical-based ETFs: Such funds invest directly in physical commodities like gold, crude oil, or grains, while bearing the additional cost of transport, storage, and security. Equity-based ETFs: These invest in stocks of commodity-based companies, such as shares in oil companies like Royal Dutch Shell (RDS-A). Such ETFs avoid the hassles of commodity storage and operational issues. However, they carry stock-specific and overall market risks………………………………………..Full Article: Source

Copper Futures Decline Most in a Week on Chinese Housing Data

Posted on 18 February 2015 by VRS  |  Email |Print

Copper futures fell the most in a week after a report showed declining property prices in China, the world’s largest metal user. New-home prices fell in 64 out of 70 cities in January, Chinese government data showed on Tuesday. That signaled an interest-rate cut in November, the first since 2012, hasn’t revived construction yet. Property accounts for about half of China’s copper demand, according to Goldman Sachs Group Inc.
“More and more reports are indicating that the slowdown is not getting any better,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “Prices will probably remain under pressure until we see China taking some aggressive steps to boost growth.”……………………………………….Full Article: Source

Commodity ETFs Vs Futures: Different Exposure, Different Price

Posted on 18 February 2015 by VRS  |  Email |Print

Long Only Commodities as an asset class has been plummeting since around April last year, and the downtrend continues into 2015. The average move of commodity futures in January came out to be -5.02%, compared to ETFs -7.54%, with ETFs underperforming the futures markets they supposedly track by 2.52% {Past performance is not necessarily indicative of future results}.
Here’s our monthly look at: 1. How the numerous commodity ETFs which have sprung onto the scene the past few years are tracking a simple strategy of just buying the December futures market of that commodity, under the theory that the ETF will have to roll their positions periodically throughout the year, and in doing so take on costs the simple strategy does not have………………………………………..Full Article: Source

Gold Futures Approach $1,300 to Post Longest Rally in 11 Months

Posted on 21 January 2015 by VRS  |  Email |Print

Gold futures approached $1,300 an ounce to post the longest rally in 11 months as signs of slowing global economies boosted demand for the metal as a haven. Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, last week rose 3.3 percent, the most since May 2010.
Economists expect European Central Bank President Mario Draghi to make his biggest push yet to steer the euro area away from deflation by announcing quantitative easing on Jan. 22, according to a Bloomberg survey………………………………………..Full Article: Source

2014 Commodity Exposure: Futures vs ETFs

Posted on 14 January 2015 by VRS  |  Email |Print

Throughout the year, we track a simple strategy of buying the 12 month out Futures contract against the commodity ETFs that supposedly track those very same futures, to see just how the performance lines up; knowing that ETFs typically are the ones that underperform because of the contract roll. For more on how this looks long term, see our recent deeper look into the $USO Oil ETF.
But regardless of whether you’re tracking correctly – the concept of buying and holding commodities, whether it be via futures, or via ETFs via futures – isn’t proving to be all that great anyway, with an average performance of -7%, compared to the ETFs -11% (and -12% and -16% if don’t include Cofee)………………………………………..Full Article: Source

How to make futures trading in commodities buoyant

Posted on 08 January 2015 by VRS  |  Email |Print

Futures trading in India has seen a structural improvisation in the recent past. The commodity exchanges performance and the way they conduct trading indicate the development of the futures markets in general. Yet, they have not attracted significant participation.
While the futures market is expected to be instrumental in price discovery and risk management, there still debate on its utility among policy makers. The Forward Markets Commission (FMC) regulates the commodity markets; the exchanges act as demutualised self-regulatory organisations and they have adjunct clearinghouses for settlements and clearing the trade………………………………………..Full Article: Source

Copper Risess to Highest in a Week on Copper-Mine Strike

Posted on 10 December 2014 by VRS  |  Email |Print

Copper futures rose to the highest in more than a week as prospects for a strike at a mine in Peru sparked supply concerns. Workers at the Antamina mine in Peru plan to stop work tomorrow at midnight over pay and bonuses, said Jorge Juarez, a union leader. The site, owned by BHP Billiton Ltd. and Glencore Plc, is the world’s sixth-biggest source of the metal by capacity, according to the International Copper Study Group.
“Strikes are always in general supportive for prices when the news first breaks,” Edward Meir, an analyst at INTL FCStone Inc. in New York, said in a telephone interview. “If the market senses the strike is sticking because supplies really start actually decreasing and you see pressure on inventories, then it becomes something serious.”……………………………………….Full Article: Source

Euronext to launch dairy derivatives in 2015

Posted on 28 November 2014 by VRS  |  Email |Print

European exchanges operator Euronext will launch a range of dairy futures and options next year, betting the abolition of European Union milk production quotas will spur demand for hedging and pricing tools in the industry.
Euronext will offer derivatives for butter, skimmed milk powder and whey powder, with the launch scheduled for the spring, it said on Thursday. The EU, the world’s top dairy producer, is scrapping milk production quotas from April 2015 in response to growing global demand for dairy products, a move expected to lead to an increase in EU output and greater volatility in prices……………………………………Full Article: Source

Bad Year for Commodities, Whether in Futures or ETFs

Posted on 18 November 2014 by VRS  |  Email |Print

Only 4 on the commodity contracts we’re tracking are positive on the year, suggesting that buying and holding a commodity market no matter the exposure, would be enough to make you cringe. For the first time this year, buying and holding futures contracts (on average) are outperforming their etf counterparts.
While the Long/Short AG Trader’s Index looks pretty impressive sitting there at +4% or so (compared with -13% for $DBC, the all commodities ETF), it’s been a rough couple of months for the Ag Trader’s as Grain markets have bounced back from yearly lows. If looking for smart commodity exposure, there’s no better time than now to look at the Ag Traders (in our opinion)…………………………………Full Article: Source

Large Speculators Add To Gold Bullish Positions For First Time Since Mid-August

Posted on 21 October 2014 by VRS  |  Email |Print

After cutting bullish Comex gold futures and options holdings for eight straight weeks, large speculators added to their net-long holdings, according to data compiled by the Commodity Futures Trading Commission.
The rise in net-long gold positions in the disaggregated and legacy reports coincides with a rebound in prices for the time period ending Oct. 14. For rest of the metals complex, the situation was mixed. In silver, funds expanded a net-short position in the disaggregated report and reduced a net-bullish position in the legacy data. In the platinum group metals, large speculators cut palladium exposure, but added to platinum positions. In copper, funds narrowed their net-short position………………………………………..Full Article: Source

Gold Futures Rise to Four-Week High on Demand for Haven

Posted on 15 October 2014 by VRS  |  Email |Print

Gold futures rose to the highest in almost four weeks as concern that global economic growth is slowing spurred demand for a haven asset. The metal advanced this month as Federal Reserve officials indicated a worldwide economic slowdown may delay U.S. interest-rate increases. Germany cut its growth outlook today, and investor confidence fell to the weakest in two years as recession concerns mount.
Holdings in exchange-traded products backed by gold rose yesterday by the most since July. On Oct. 10, the assets were at a five-year low. Prices climbed 2.4 percent last week, snapping five straight losses, as bets that record-low borrowing costs will persist fueled investor demand………………………………………..Full Article: Source

Soybean Futures Prices Tumble to Nearly Four-Year Low

Posted on 27 August 2014 by VRS  |  Email |Print

Soybeans fell to their lowest intraday price for a front-month contract in almost four years, as September futures near expiration, spurring investors to close out their positions. The so-called first-notice day is Friday, when investors who had bought contracts betting on rising price trend may be required, depending upon terms of their original transaction, to take delivery of the soybeans.
To avoid taking delivery, contract holders must sell and either liquidate their position or roll their investment into a future month. The September contract expires on Sept. 12. The bulk of soybean futures contracts traded on commodities exchanges don’t end in delivery of the underlying product………………………………………..Full Article: Source

ICAP launches Singapore coal derivatives trading

Posted on 22 August 2014 by VRS  |  Email |Print

ICAP, the world’s largest interdealer broker, has opened a coal derivatives trading desk in Singapore in a move that highlights the growing importance of the Asian city-state as a commodities trading hub amid robust Chinese demand for coal. It is another sign of London-based ICAP’s ambitions to tap increasing demand in Asia for hedging of physical purchases of commodities.
In May the company launched an electronic trading platform for iron ore swaps in Singapore, in part to capture demand from Chinese traders………………………………………..Full Article: Source

CME to Start EU Gas Futures as Trayport Remains Independent

Posted on 06 August 2014 by VRS  |  Email |Print

CME Group Inc. plans to start U.K. and Dutch natural gas futures while keeping the energy trading platform it agreed to buy from GFI Group Inc. independent. The world’s biggest derivatives exchange may offer gas trading at the U.K.’s National Balancing Point and the Title Transfer Facility in the Netherlands as early as next month, Martin Fraenkel, CME’s managing director for International Energy, said.
The expansion means the Chicago-based bourse will rival other exchanges that feed prices into the Trayport Ltd. system it agreed to buy last week………………………………………..Full Article: Source

CME Group to Acquire Trayport and FENICS from GFI Group

Posted on 31 July 2014 by VRS  |  Email |Print

CME Group, the world’s leading and most diverse derivatives marketplace, and GFI Group Inc., a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets, today announced that they have entered into definitive agreements to create value for their respective stockholders through a two-step transaction through which:
CME Group will acquire Trayport and FENICS. CME Group will purchase these businesses by first acquiring all of the outstanding shares of GFI Group in exchange for $4.55 per share in CME Group Class A Common Stock which represents a 46% premium above yesterday’s closing price of $3.11 per share of GFI Group common stock………………………………………..Full Article: Source

Global oil demand growth is forecast to accelerate to 1.4 mb/d in 2015

Posted on 14 July 2014 by VRS  |  Email |Print

Oil futures surged in mid‐June by $5/bbl to a nine-month high of more than $115/bbl for Brent as Islamist forces gained ground in Iraq, but later reversed their gains on confidence that Baghdad’s southern fields would remain untouched and improved prospects for a recovery in Libyan exports. Brent last traded at $108/bbl, WTI at $102/bbl.
OPEC supplies were virtually unchanged in June at 30.03 million barrels per day (mb/d), as lower Iraqi production offset gains in Saudi Arabia, Iran, Nigeria and Angola. The ‘call’ on OPEC for 2H14 was cut by 350 000 barrels per day (350 kb/d) to 30.6 mb/d on improved non‐OPEC supply and lower demand, and is forecast to dip to 29.8 mb/d in 2015 from 29.9 mb/d in 2014. ……………………………………….Full Article: Source

India: Survey gives a boost to commodity futures

Posted on 10 July 2014 by VRS  |  Email |Print

Economic Survey 2013-14 has given a thumbs-up to commodity futures, saying, “Commodity futures trading is essential for a modern food sector, as it generates forecasts about future prices that shape sowing and storage decisions across the country.” This comes as relief for market participants, as most feared harsh action related to essential commodities. A 2011 report by a committee headed by then Gujarat chief minister Narendra Modi had opposed futures trade in essential commodities.
The survey, recommended, “Procurement agencies can use this platform to their benefit by hedging their future requirements on a regular basis, according to the provisions of the NFSA (food security Act)”……………………………………….Full Article: Source

Gold Option Trade: Will Gold Continue To Consolidate?

Posted on 07 July 2014 by VRS  |  Email |Print

Until recently, the world has forgotten about Gold and gold futures prices it would seem. A few years ago, all we heard about was gold and Silver futures making new highs on the back of the Federal Reserve’s constant money printing schemes. However, after a dramatic selloff in the world of precious metals it became very quiet.
Gold prices have been in a giant basing or consolidation pattern for more than one year. As can clearly be seen below, gold futures prices have traded in a range between roughly 1,175 and 1,430 since June of 2013………………………………………..Full Article: Source

Water – Hot commodity of the future?

Posted on 03 July 2014 by VRS  |  Email |Print

Why trading water futures could be in our future? In the next quarter century, demand for water will boom as the world population swells. This liquid gold is expected to be traded like oil. Already commodity experts are brainstorming on how to create a marketplace for water futures.
Water is the one natural resource required to sustain all life on the planet, making it already the most important commodity on Earth. Although it has been fought over, sold, diverted, dammed, claimed by governments and overseen by authorities, Wall Street has never really gotten its hands in it the way it has with, say, oil………………………………………..Full Article: Source

Derivatives House of the Year: Citi

Posted on 06 June 2014 by VRS  |  Email |Print

While other banks are nervously pulling back from commodity and energy derivatives trading, Citi is boldly pushing ahead. With so many major players withdrawing from all or part of the market during the past few years, commodity and energy trading suddenly seems like a hostile environment for investment banks.
But at a time when so many banks are scaling back their ambitions in commodity and energy derivatives, Citi stands out for a level of commitment that has baffled some of its less bullish rivals. As other banks nervously pull back, Citi is boldly pushing ahead………………………………………..Full Article: Source

Citi Wins Commodity Derivatives House of the Year from Energy Risk

Posted on 05 June 2014 by VRS  |  Email |Print

Citi has won the award for best commodity derivatives house from Energy Risk, the highly-respected commodities publication. The Energy Risk Awards celebrate excellence across the global commodity and energy markets and are determined by a judging panel consisting of the Energy Risk editorial team and external industry experts.
“We are delighted and honoured to have been recognised by Energy Risk with this award. It underlines the progress that Citi has made in the last several years in building a commodities business that is not only an industry leader but also the right business for Citi in the new regulatory environment,” said global head of commodities Stuart Staley………………………………………..Full Article: Source

India: Banks can wait to trade in commodity futures

Posted on 27 May 2014 by VRS  |  Email |Print

At a time when the Government is keen to fight inflation, readying to reform the commodity market and reduce the role of speculative capital, it is incongruous that a Finance Ministry panel should recommend that commercial banks and foreign institutional investors should be allowed to enter the commodities futures market. Currently, banks, mutual funds and FIIs are not allowed to trade commodity futures; and the market is none the worse for it.
Way back in 2006, the Gupta Committee report released by Reserve Bank of India argued in favour of allowing banks, MFs and FIIs to trade commodity futures. The policymakers kept the recommendation on hold, and for good reasons………………………………………..Full Article: Source

Agri futures market expands

Posted on 27 May 2014 by VRS  |  Email |Print

With the expansion of the derivatives market for agricultural commodities,the Forward Markets Commission (FMC) aims to move towards making India a price setter in those products where it has been an influential producer.
In precious metals such as gold and silver, futures prices traded on the Multi Commodities Exchange (MCX) are already influencing international markets. And, markets abroad are taking note of movements in agri commodities such as cotton and soybean, since trade in these have been permitted in the evening session, too………………………………………..Full Article: Source

How To Buy Gold Options

Posted on 21 May 2014 by VRS  |  Email |Print

Buy gold options to attain a position in gold for less capital than buying physical gold or gold futures. Gold options are available in the U.S. through the Chicago Mercantile Exchange (CME), so if you’ve wondered how to invest in gold, here’s a shorter-term and less capital intensive way to do it.
Use options to profit whether gold prices rise or fall. Believe the price of gold will rise? Buy a gold call option. A call option gives the right, but not the obligation, to buy gold at a specific price for a certain amount of time (expiry). The price you can buy gold at is called the strike price…………………………………..Full Article: Source

Coffee Futures Buoy Commodity Indexes in 2014

Posted on 16 May 2014 by VRS  |  Email |Print

For the last few years, commodities have dragged behind surging equities as it seemed that the commodity supercycle was beginning to cool off. However, 2014 has seen broad commodity indexes outpace equities. Beating gains of just over 2% in a little more than four months isn’t anything to write home about, but hard assets are holding their own nonetheless. However, most commodity indexes are benefiting from one hard asset in particular — coffee.
Coffee futures have had a rough go over the past few years, losing 12%, 43%, and 33% in 2011, 2012, and 2013, respectively. Thanks to a drought in Brazil, where the vast majority of coffee beans are produced, prices have been surging in 2014. ……………………………………….Full Article: Source

The importance of storage rates in commodity trade

Posted on 08 May 2014 by VRS  |  Email |Print

Commodity futures market convergence is the process where prices in the spot and futures markets come together or converge at futures market expiration. Convergence occurs at the expiry date of every futures contract because of arbitrage. If spot prices remain below futures prices, a market participant could buy in the spot market and sell in the futures market and make a risk-free profit.
Similarly, if the spot price is above the futures price, a market participant can buy in the futures market, take delivery and sell in the spot market and earn a risk free-profit………………………………………..Full Article: Source

Shanghai bourse plans to launch base metals index contract

Posted on 25 April 2014 by VRS  |  Email |Print

The Shanghai Futures Exchange (ShFE) plans to launch a futures contract on a base metals index as part of steps to internationalise its business, Chairman Maijun Yang said on Thursday.
ShFE is China’s biggest exchange for base metals, already trading copper, zinc, aluminium and lead. It said last year it also has plans to trade nickel and tin. Yang did not provide a timeframe for the new contracts………………………………………..Full Article: Source

India: Commodities futures trade volumes fall for second year

Posted on 09 April 2014 by VRS  |  Email |Print

Commodity futures trading volumes in India fell 40.49 percent in the year to March 2014, its second straight year of decline, the market regulator said on Tuesday.
In value terms, futures trading at commodity exchanges fell to 101.44 trillion rupees in the first twelve months from April 2013 from 170.46 trillion rupees a year ago, the Forward Markets Commission said in a statement on its website………………………………………..Full Article: Source

US futures regulator to examine high-frequency traders

Posted on 04 April 2014 by VRS  |  Email |Print

The U.S. Commodity Futures Trading Commission is investigating high-frequency traders to see if they were breaching the derivatives regulator’s rules, its chief said Thursday.
“Staff (is) responding to concerns brought to us about certain practices, whether it be spoofing just to give one example, whether that’s running afoul of our rule,” Acting Chairman Mark Wetjen told reporters during a meeting. “And then whether or not it meets the definition of manipulative activity under our statute,” he said………………………………Full Article: Source

Oil futures dip on continued demand concerns

Posted on 03 April 2014 by VRS  |  Email |Print

Oil prices declined Wednesday as a drop in U.S. supply failed to erase traders’ fears about sluggish demand. U.S. crude-oil supplies fell last week for the first time in 11 weeks, the U.S. Energy Information Administration said, upending analyst expectations. But traders wrote off the drop as a one-week aberration–a closure of the Houston Ship Channel between March 22 and March 25 limited imports of crude oil and required refiners to draw more supplies from storage.
Inventories likely will rise again next week, said Andy Lipow, president of Lipow Oil Associates in Houston. Demand for crude oil typically falls in March as refineries shut down units for seasonal maintenance…………………………………Full Article: Source

CFTC steps up probe of ‘exchange for futures’ deals

Posted on 24 March 2014 by VRS  |  Email |Print

The US derivatives watchdog has warned market participants of potential legal charges as it escalates a probe into more than a million energy, metals, foreign exchange and other swap transactions.
Commodity Futures Trading Commission staff have sent “Wells notices” as they examine a broad category of transactions that includes “exchanges of futures for swaps,” or EFSs, three people familiar with the matter said………………………………………..Full Article: Source

China looks beyond commodity derivatives with equity options launch

Posted on 21 March 2014 by VRS  |  Email |Print

Commodities have been the mainstay of China’s derivative markets so far but the launch of equity options on two of the country’s main exchanges could see this dominance challenged.
Although the first commodity-linked futures contract in China was traded in March 1991 on the Zhengzhou Commodity Exchange, the development of other asset classes including equity-linked futures and options products has lagged markedly with the first futures contract referencing the CSI 300 index, an index of 300 Shanghai and Shenzhen listed A-shares, launched as recently as 2010 on the China Financial Futures Exchange (CFFEX)………………………………………..Full Article: Source

SGX commodity derivatives up 70pct last year

Posted on 21 March 2014 by VRS  |  Email |Print

Commodity derivatives traded via the Singapore Exchange (SGX) rose by 70 per cent last year, outpacing the global growth rate of 23 per cent, SGX said on Thursday.
It said over-the-counter (OTC) Iron Ore was its most popular commodity derivatives contract, with the number of lots traded rising by 166 per cent to 584,157 lots. The highest percentage growth was generated by OTC Rubber, which grew 278 per cent to 2,778 lots………………………………………..Full Article: Source

CME Group to launch North American aluminum futures

Posted on 19 March 2014 by VRS  |  Email |Print

CME Group, the world’s leading and most diverse derivatives marketplace, announced today it will launch North American physically delivered Aluminum futures contracts to begin trading on May 5, 2014, pending all regulatory approvals.
This new contract will build on CME Group’s existing suite of base metals products, including the Aluminum MW U.S. Transaction Premium Platts (25MT) futures contract, which was introduced in April 2012. These new Aluminum futures contracts will offer global aluminum market participants a new tool for managing their exposure to volatile North American prices, while giving them access to physical aluminum at a number of CME Group-approved warehouses across the U.S. (Press Release)

Big gold futures buying pushing market higher

Posted on 18 March 2014 by VRS  |  Email |Print

Gold’s strong rebound upleg this year has been driven by big gold-futures buying. After abandoning gold last year, American futures speculators are returning to the yellow metal in droves. These capital inflows are a very bullish harbinger, as major futures buying is the primary fuel for young gold uplegs before investors return to take the baton. And this big gold-futures buying is likely less than half done!
From a pure fundamental supply-and-demand standpoint, gold’s crushing losses last year were solely attributable to record gold-ETF selling by stock traders………………………………………..Full Article: Source

Why coffee futures are up 80pct in 2014

Posted on 18 March 2014 by VRS  |  Email |Print

After commodities had a rough go in 2013, taking the backseat to surging equities, it seems that this year has more favorable conditions in store for a number of hard assets. Though a number of commodities have gotten off to a white-hot start this year, none have even come close to the gains that coffee futures have notched, as that commodity has spiked more than 80% through the first 10 weeks of the year.
Coffee on the Rise: Futures for coffee are currently hovering at a fresh two-year high, as production in the world’s most vital region has spooked investors. Brazil is, by far, the largest producer of coffee on an annual basis………………………………………..Full Article: Source

Shanghai to open up trading of commodities futures

Posted on 13 March 2014 by VRS  |  Email |Print

The Shanghai Futures Exchange is vying for more influence in the global market with plans to open up trading of its long-awaited crude oil futures and a number of other commodities futures to foreign investors.
“China is a big importer of crude, and we rely 60 per cent on crude imports. However, our influence in the global pricing of crude oil has been low, and it doesn’t match with our big consumption,” exchange chairman Yang Maijun said………………………………………..Full Article: Source

EU derivatives rules sow confusion in metals markets

Posted on 27 February 2014 by VRS  |  Email |Print

New European Union rules designed to bring stability and clarity to opaque derivatives markets are sowing confusion among metals brokers, raising more questions than answers for clients and throwing the fate of smaller firms into doubt.
The bloc’s European Market Infrastructure Regulation (EMIR) is a package of reforms drawn up in response to the global financial crisis, in which less regulated market conditions allowed contagion to spread quickly………………………………………..Full Article: Source

Preparing for the unexpected with commodity futures ETFs

Posted on 25 February 2014 by VRS  |  Email |Print

Three straight years of negative returns for broad commodity benchmark indices, such as the Dow Jones-UBS Commodity Total Return Index, have led some investment advisers (and their clients) to begin questioning the rationale for including commodity futures ETFs in their asset allocation models.
Relatively tame inflation expectations seem to support these doubts, as commodities are often thought of as a hedge against inflation. However, the fact that inflation expectations are so low may actually highlight one of the most important reasons for maintaining (or adding) a strategic allocation to commodity futures ETFs: in order to hedge against unexpected inflation………………………………………..Full Article: Source

India: Commodities, securities norms to converge

Posted on 14 February 2014 by VRS  |  Email |Print

With the commodities derivatives regulator, Forward Markets Commission (FMC), now under the finance ministry, rules governing the commodities markets are being converged with the securities derivatives’, wherever there are similarities.
One is to disallow commodity exchanges from having different transaction charges for different brokers. In securities, irrespective of volumes, the charges are similar for all brokers. However, the FMC has allowed exchanges to have different transaction charges for deliverable commodities………………………………………..Full Article: Source

Gold seen rising to $1,400 on 100-day average by Citi Futures

Posted on 12 February 2014 by VRS  |  Email |Print

Gold prices are poised to extend their 2014 rebound and reach $1,400 an ounce, the highest since September, according to technical analysis from Citi Futures and RBC Wealth Management.
Prices yesterday settled above the 100-day moving average for a second straight day for the first time since October. The metal has also closed above its 50-day measure in every session since Jan. 23. The pattern signals prices will rally 8.5 percent by the end of March, Chicago-based Sterling Smith of Citi Futures said………………………………………..Full Article: Source

Iron ore derivatives see growth spurt

Posted on 11 February 2014 by VRS  |  Email |Print

Call it a theory of evolution for commodities. First, prices are set on long term contracts; then indexation and the spot market take over. Then derivatives emerge.
Since the 1970s and 1980s all the major raw materials from oil to coal to copper have followed this evolutionary path with one notable exception – iron ore………………………………………..Full Article: Source

India: Commodity futures regulator to allow trading by bourse shareholders

Posted on 07 February 2014 by VRS  |  Email |Print

The commodity derivatives market regulator, Forward Markets Commission (FMC), is in the process of relaxing curbs to help brokers with a small shareholding in an exchange to start trading on it.
Chairman Ramesh Abhishek said at an Assocham conference here on Thursday that “the guidelines do not allow brokers with shareholdings in exchanges to trade even if these are in some other exchanges. We are in discussions with the government to change these. We feel brokers with up to two per cent or some such percentage can be allowed to trade as long, as they have no say in the management or on the board.”……………………………………….Full Article: Source

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