COMMODITY MARKETS ASSIGNMENT

COMMODITY: WHEAT (considering the same quality of wheat) PRICE IN FUTURES/EXCHANGE: Rs.1291.20 PER 100KGS PRICE IN FORWARDS: Rs.1285 PER 100 KGS PRICE DIFFERENCE BETWEEN FUTURES & FORWARD = Rs.6 PER KG HISTORICAL DATA OF WHEAT PRICES IN INDIA FROM JANUARY-2012 AT FUTURES (Considering highest prices) JANUARY Rs.1270 FEBRUARY Rs. 1267.50 MARCH Rs.1303 APRIL - Rs. 1335 STATE: ANDHRA PRADESH PLACE: BANSWADA MAXIMUM PRICE: NR (not reported) MINIMUM PRICE: NR (not reported) MODAL PRICE: Rs.1285 STATE: KERALA PLACE: ALLEPEY MAXIMUM PRICE: Rs.2500 MINIMUM PRICE: Rs.2300 STATE: ASSAM MAXIMUM PRICE: Rs.1100 MINIMUM PRICE: Rs.1000 MODAL PRICE: Rs.1050

INTERPRETATIONS
1. Considering the above 3 states from India, being a farmer producing the standardized huge quality wheat, it would be more profitable to sell the yield in over the counter market as its price is Rs.6 more than futures market price. 2. If the farmer yield is low then he has option of selling it in either futures or over the counter markets as there is narrow difference of prices. 3. For the farmer it is more profitable to sell the yield in Kerala over the counter market as maximum price per 100kgs is Rs.2500. So, farmer would be able to make Rs.1209.20 profit over futures market. 4. From the point of view of buyer, it would be more productive to buy the yield from over the counter market as price per 100kg of wheat is Rs.1285. It would be more profitable for him to buy from Assam over the counter market as price of same quality of wheat is Rs.1100. by buying from Assam market he would mitigate the risk of loss in futures market by Rs. 191.

FROM; V.SRAVANTHI PGDM-A PGDM17/11/A39