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IS SPECULATION ALLOWED IN COMMODITIES?

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Should Speculation allowed in commodity market in eatables & other things necessary for life? Plz Give Answer with comment.

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3 Replies

Vijay (CA) (254 Points)
Replied 22 February 2008

HI Its not necessary but to keep maximum things comodities under exchage net, its doing by MCDEX. One way it is good for traders who wants to take actual deliveries of commodities. They can hedge the risk of price fluctuations. Thanks Vijay

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CA Dilip (Financial Service) (181 Points)
Replied 27 March 2008

It’s a very good thought to avoid speculators in commodities market.

What will the commodities broking company do? They need volume to earn brokerage.

Try taking a buy position in a crude or gold u will love it when the price goes up, (people are too greedy for money.)

Rahul Gupta (CA Final Student) (1780 Points)
Replied 27 March 2008

The plunging prices reflect excessive speculation in the commodities market; on the ground, this excess is evident in soaring retail prices across a range of grain, oil, pulses,etc.

If onion prices in the past had cost the Bharatiya Janata Party (BJP) a State election, the Congress led government literally has the hot potato to contend with. Tuber prices in the retail market have shot up from around Rs 12 a kilo to over Rs 20 and still rising. There are also reports about large scale hoarding by retail traders in anticipation of short term profit.

The relentless rise in retail prices of basic food grain, oil, pulses etc, is affecting every household in a country which already spends a disproportionately high proportion of earnings on food and basic essentials.

Speculation in commodity market should be avoided so that prices of mainly OIL which is soaring at the moment can be controlled...the most expensive production cost of crude oil is just $35/barrel and rest the cost is around just $10/barrel. the speculation in the oil market has lead increase in the prices of oil to above $100/barrel..this is redecules..! since oil is the basic and most wanted input in the economy and the prices of which has increased considerably..that is the reason that the ultimate ouput has been affected.i.e inflation..!

regards..

rahul