Agricultural Trading

Agricultural Trading

Agricultural Trading

The Agricultural Commodities Market

Here, The trade in agricultural commodities dates back thousands of years.

And making it the oldest financial market in the world. 

Hence, with prices intimately tied to weather patterns, supply and demand, and a wealth of other factors.

And there are always new opportunities for traders.

Thus, Over the last 63 years, the average returns on the agricultural commodities market have been significantly higher than the global inflation rate. 

And a consideration when deciding on what contracts to trade on.

What Influences Agricultural Commodities Prices?

Here are many factors that impact agricultural commodities prices.

And Some of these include the usual supply and demand, seasonal price cycles.

And weather events, such as droughts, floods, extreme cold, and other natural disasters.

These events have a big impact on commodities, especially when it comes to crops, such as wheat, corn, and soybeans.
And When it comes to livestock.

Agricultural Trading

And there can be a wide range of issues that may arise. Agricultural Trading.

Hence, which can impact the prices of these commodities. Agricultural Trading.

Thus, If an epidemic arises, this will affect the supply of the livestock, while a lack of crops that feed the livestock.

And can also negatively impact agricultural commodities prices. Agricultural Trading.

Here, there are many tariffs which are attached to the import and export of commodities. Agricultural Trading.

And while trade wars can also come into play. Agricultural Trading.

Thus, Many governments around the world apply tariffs to goods, including commodities, in order to protect their own producers.

Here, Agricultural goods are therefore traded with all of these macroeconomic issues in mind. Agricultural Trading.

How Are Agricultural Products Traded?

And While there are agricultural products traded in minor exchanges around the world.

And the largest by far is the Chicago Mercantile Exchange. Agricultural Trading.

Here, This is where the largest grain futures and other agricultural commodities futures are featured.

Here, Commodities are often bought and sold on the spot market, such as crude oil.  

And a spot trade is the sale or purchase of a commodity for instant delivery. Agricultural Trading.

Agricultural Trading

Hence, this is the opposite of futures contracts, where two parties agree to transact a commodity at a specific price and date in the future.

Here, are many reasons why one would use futures and options in the commodities markets.

For example, a large buyer of corn and such as a company that produces breakfast cereal may buy corn at a specific price for delivery in the future in order to lock-in the price.

And This is referred to as hedging. Agricultural Trading.

Thus, Other market participants will use options as a way to protect themselves in the same way that a futures contract would.

And Options on agricultural commodities are often transacted directly between commercial market participants for risk management or hedging purposes.

Here are also many speculators in the commodities market, and this is where the average retail trader comes into play.

And at AvaTrade, we offer commodities CFD trading, which means that you do not need to concern yourself with the purchase of the actual commodities.

Thus, you simply need to speculate on the direction that the price of the commodity will move.

Agricultural Trading

And Commodity CFD trading with AvaTrade removes the complexities of trading the actual goods.

Hence, it enables traders to benefit, irrespective of the direction that the market is moving.

What is the Agricultural Commodities?

Here, Agricultural commodities are a vital part of our existence.

And probably even more than we realize.  Agricultural Trading.

Hence, These commodities fall into the category of soft commodities. 

And which include a variety of agricultural products, such as sugar, cocoa, wheat, and coffee.

And In contrast, hard commodities are mined, and include, for example, crude oil, silver, and gold.

Agricultural commodities can also be divided into 3 main categories:
· Food crops, such as corn and soybeans.
· Livestock, such as cattle and pork bellies.
· Industrial crops, such as wool and rubber.

Open an account and trade agricultural commodities with a regulated, award-winning broker!

Here, These important commodities generally have three main purposes. Agricultural Trading.

And they are either meant to be used, traded for goods or speculated upon. Agricultural Trading.

Thus, With such a huge demand for these products by people, nations, and companies globally.

Hence, Agricultural commodities trading offers a wide range of trading opportunities.

Agricultural Trading

And At AvaTrade, we provide a secure and all-inclusive trading environment that enables you to trade your preferred agricultural commodity.

And with access to a wide range of trading tools and features.

Introduction

Here, The expansion of agricultural trade has helped provide greater quantity, wider variety, and better quality food to increasing numbers of people at lower prices.

And agricultural trade is also a generator of income and welfare for the millions of people.

Who people are directly or indirectly involved in it. hence, At the national level, for many countries.

And it is a major source of the foreign exchange that is necessary to finance imports and development.

While for much other domestic food security is closely related to the country’s capacity to finance food imports.

Here, As with any activity that involves buyers and sellers, however, agricultural trade – perhaps more than any other trade tends to be a source of conflicts of interest and international confrontation.

And One reason for this is that agricultural policies are frequently influenced by the interests of particular political constituencies within a country rather than by national, international or global interests.

Agricultural Trading

Hence, Related reasons are the emergence and growth of widespread distortions in world agricultural markets.

And the food-security role of agricultural trade, which confers upon it a special political, socio-economic and strategic dimension.

And, more recently, differing perceptions of the role of agricultural trade in environmental matters of transnational or global interest.

Here, Agricultural trade policy has long reflected the widely held belief that. Agricultural Trading.

Because it is importance and vulnerability. Agricultural Trading. 

Therefore the agricultural sector could not be exposed to the full rigors of international competition without incurring unacceptable political, social and economic consequences.

And This view has led to high and widespread protection of the sector. Agricultural Trading.

Hence, which has been a cause of depressed and unstable agricultural commodity markets, in their turn, leading to further pressures for protection.

Hence, In recent years, many developing countries have unilaterally taken steps towards the liberalization of overall and agricultural markets.

And Most of these steps have involved the development of structural adjustment programmes and regional cooperation schemes.

Therefore, In the former centrally planned economies, the systemic reforms underway have also led to greater external openness and this process, in particular, the increasingly important role in international trade that China is likely to play.

Agricultural Trading

And as far-reaching implications worldwide. Agricultural Trading.

And for a number of developed countries, including such major traders as the United States and the EC, agricultural policy reform induced by domestic.

Hence, international pressure has led to some reduction in trade distortions but not to significant trade liberalization as yet.

Here, It was against this background of widespread protectionism and deep structural problems in the world agricultural trading system.

And that the Uruguay Round of GATT negotiations took place. Agricultural Trading.

It is the conclusion, and the creation of a new World Trade Organization, have been milestones in the recent history of international trade relations.

And even though the results of the Round fell short of expectations. Agricultural Trading.

Despite it is shortcomings the Round was a momentous event for agricultural trade. Agricultural Trading. 

First because, by it is very conclusion, the worst was avoided. Agricultural Trading.

Here, second, because agriculture was, for the first time, a major element in the negotiations. Agricultural Trading.

And third, because it provides hope for at least some progress towards greater market liberalization and reduced domestic support in agriculture.

Agricultural Trading

And fourth, because the Round, and the newly created World Trade Organization, provide the framework for more discipline, stability, and transparency in overall and agricultural trade.

Here, the impact of the Round on world agricultural markets may turn out to be small in the short term.

Hence, protectionism in old and new forms is likely to remain high in the medium term and for longer unless further reductions are successfully negotiated.

Here, At the same time as the international community was framing new multilateral rules for trade, many groups of countries were actively moving towards regional trading arrangements.

And In the recent past, such arrangements have increased in number, country coverage, and dynamism.

And they include agriculture to a growing extent. Agricultural Trading.

Hence, The development of these arrangements has raised issues related to their position in the multilateral trading system.

And their degree of openness vis-à-vis third countries and the risks of regionalization of trade flows. Agricultural Trading.

Here, the problems and issues facing agricultural trade and the forces underlying agricultural trade policies can only be appreciated in the light of the major changes.

Agricultural Trading

And that has taken place in world markets during the past decades. Agricultural Trading.

Hence, the first Section of this chapter presents some basic data illustrating the main changes that have taken place since the early 1960s with regard to the weight of agriculture in overall trade.

And the market shares of the different regions and countries the real value and purchasing power of agricultural exports and the direction and composition of agricultural trade flows.

Here, The second Section examines agricultural trade in the context of the major political and economic transformations that have taken place during the past decades.

And especially since the beginning of the 1980s. Agricultural Trading.

Section 3 discusses the new agricultural trading rules that emerged in 1994 after the conclusion of the Uruguay Round of GATT negotiations and their likely impact on world agricultural trade.

And Section IV discusses the movement towards closer regional economic integration. Agricultural Trading.

And through the development of regional trading blocs and the place of agriculture in this process. Agricultural Trading.

Finally, Section 5 examines the interfaces between agricultural trade. Agricultural Trading.

And the environment and sustainable development and the conditions under. Agricultural Trading.

Agricultural Trading

Thus, which trade and the environment could be made mutually supportive. Agricultural Trading.

Here, The problems and issues facing agricultural trade and the forces underlying agricultural trade.

And policies can only be appreciated in light of the major changes that have taken place in world markets during the past decades.

Hence, The first Section of this chapter presents some basic data illustrating the main changes that have taken place since the early 1960s with regard.

Here, The second Section examines agricultural trade in the context of the major political and economic transformations.

And that has taken place during the past decades. Agricultural Trading.

And especially since the beginning of the 1980s. Agricultural Trading.

Section 3 discusses the new agricultural trading rules that emerged in 1994 after the conclusion of the Uruguay Round of GATT negotiations and their likely impact on world agricultural trade.

And Section IV discusses the movement towards closer regional economic integration. Agricultural Trading.

And through the development of regional trading blocs and the place of agriculture in this process. Agricultural Trading.

Finally, Section 5 examines the interfaces between agricultural trade. Agricultural Trading.

And the environment and sustainable development and the conditions under which trade and the environment could be made mutually supportive.

Agricultural Trading

Agricultural trade – changing trends and patterns

Here, Amid the profound changes in the economic importance, structure, direction, and composition of the world.

And agricultural trade during the past three decades, a number of paradoxical features have emerged. Agricultural Trading. 

And While losing importance in relation to total trade, agricultural trade has remained a key element in the economies of many countries.

Hence, Nevertheless, it has tended to be those economies that depend less on agricultural trade, and which have made the largest gains in agricultural market share.

And while economies that are more firmly based on agriculture have not only lost market share. Agricultural Trading.

Hence, but in many cases have also seen their agricultural trade balances deteriorate in the face of persistently high. Agricultural Trading.

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And or even increasing economic dependence on agricultural exports and food security dependence on imports.

Here, Other general tendencies have been a protracted decline in the real international prices of agricultural products and which has negatively affected their purchasing power.

And greater geographic diversification of agricultural trade flows. Agricultural Trading.

Here, along with intensified intraregional exchanges. Agricultural Trading.

Thus, the increasing importance of value-added compared with primary products in total agricultural trade.

Agricultural Trading

The declining importance of agriculture in world trade

Here, The relationship between trade and output, in general, underlies the growing interdependence and integration of the world economies.

Thus, This is the case also for agriculture. Agricultural Trading.

And On a global basis, the long-term growth rate of agricultural trade has tended to be significantly greater than that of production.

Here, This pattern was reversed during much of the 1980s, reflecting depressed exports and imports in the developing countries.

And particularly in Latin America and the Caribbean and in Africa. Agricultural Trading. Agricultural Trading,

By contrast, the growth in agricultural trade continued to generally exceed that of production in the developed countries.

Here, By contrast, the growth in agricultural trade continued to generally exceed that of production in the developed countries.

Thus Despite its relative dynamism, however, trade in agricultural products has tended to lag behind the trade in other sectors. and particularly manufacturers, as industrialization proceeds.

And On a global basis, agricultural exports now account for less than ten percent of merchandise exports, compared to about twenty-five percent in the early 1960s.

Here, The tendency for agricultural trade to lose relative importance in external trade has been common to all regions.

Agricultural Trading

Hence, in the developing country regions, the process was particularly pronounced during the 1960s and early 1970s.

Thereafter, the share of agriculture in total exports has stabilized at around two to seven percent in the Near East and North Africa region.

And around ten percent in Asia and the Pacific. Agricultural Trading.

Thus, more pronounced fluctuations in the share were recorded in sub-Saharan Africa and Latin America and the Caribbean.

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And where the general decline in the agricultural trade share was punctuated by temporary upsurges.

Thus, particularly during the late 1970s in the commodity boom years and in 1986. Agricultural Trading.

And a year of high coffee prices caused by drought-reduced crops in Brazil and its suspension of export quotas.

Here, A similar pattern is observed on the side of imports. Agricultural Trading.

And The declining weight of agriculture in total imports. Agricultural Trading.

Thus, which is a good indicator of a country’s rate of development, was remarkably strong in Asia and the Pacific region.

And less marked in the Near East and Latin America and the Caribbean regions. Agricultural Trading.

Here, the latter having a comparatively low agricultural to total import ratio. Agricultural Trading.

And hardly noticeable in sub-Saharan Africa. Agricultural Trading.

Agricultural Trading

Here, Agricultural exports have also tended to lose importance as a source of import financing. Agricultural Trading.

And This long-term process has been interrupted only during exceptional periods. Agricultural Trading.

Hence, such as when particularly favorable conditions for agricultural exports prevail. Agricultural Trading.

And as in the late 1970s or more notably in the years following the debt crisis of the 1980s when many developing countries sharply contracted their total imports.

Here, in Latin America and the Caribbean and in sub-Saharan Africa, agricultural exports still finance about one-fifth of the total import bill.

Thus, economic dependence on agricultural exports has remained very high in many individual countries. Agricultural Trading.

and In 1993, 17 out of 46 countries in Africa depended on agriculture for half or more of their total export earnings.

Thus, In Latin America and the Caribbean 16 out of 40 countries were in the same situation. Agricultural Trading.

Extreme cases, where eighty percent or more of export earnings were agriculture-based. Agricultural Trading.

And included Cuba and Paraguay in Latin America; and Burundi, the Comoros, Guinea-Bissau, Malawi, Uganda, and Sudan.

Agricultural Trading

Expanding agricultural markets and contracting developing country share

Here, the regional distribution of world total and agricultural trade has changed significantly since the early 1960s.

And While the developing countries gained market share for total merchandise exports. Agricultural Trading.

From about twenty to over twenty-five percent of the world total) their share for total agricultural exports has declined from over forty to about twenty-seven percent.

Here, The counterpart to the developing countries’ market share losses was the increasing weight of the developed countries.

And mainly the EC, in world agricultural markets. Agricultural Trading.

 

Indeed, while in the early 1960s the EC-12 accounted for slightly more than twenty percent of world agricultural exports.

And this share is now around forty-five percent. Agricultural Trading.

And Most of this increase reflects intensified trade among EC member countries.

Excluding intracommunity trade, however, EC exports still represent approximately 13 % of the world total, up from 8 % in the early 1960s.

And The EC has also remained by far the largest importing area in the world. Agricultural Trading.

Hence, it is shared in world imports from outside the Community has tended to decline.

Agricultural Trading

Here, The United States, after having lost some market share during the late 1960s.

And managed to recapture it after 1973.

When the export sector benefited from liberal fiscal and monetary policies and a weak dollar.

And from 1982 onwards the tightening of macroeconomic policies the strengthening of the dollar after the second oil shock.

Thus, the ensuing world recession resulted in a marked deceleration in the growth of United States exports.

Here, All the developing country regions, with the exception of Asia and the Pacific, progressively lost world market share for their exports.

And That Asia and the Pacific has actually gained share in the world.

Thus, agricultural exports since the mid-1970s are all the more remarkable as this is also the region.

And that has been most successful in diversifying.

It is export base away from agriculture.

And In contrast, despite the persistently strong agricultural component of its external trade.

And sub-Saharan Africa’s presence in world agricultural markets has tended to lose significance since the early 1970s.

It is now of a magnitude comparable to that of the Near East and North Africa.

Agricultural Trading

And Latin America and the Caribbean experienced pronounced market losses since the second half of the 1980s.

Thus, a period of slow growth in the volume of agricultural exports and of a strong decline in export prices.

Will the developing countries remain net exporters?

And Until the late 1970s, the agricultural exports of developing countries.

And as a whole exceeded agricultural imports by a significant and relatively stable margin. 

Thus, The economic crisis of the early 1980s caused a sharp decline in the demand for developing countries’ exports.

And led to a temporary reversal of their agricultural net trade position.

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And As the crisis progressed, however, financial constraints imposed a drastic cut in imports, including of food.

Thus, the developing countries as a whole emerged again as net agricultural exporters, a position they maintained until 1991.

And Generally disappointing export performances the following two years led, once again, to a reversal in the trade balance.

Here, Regional situations, however, differed widely within this general pattern.

And Overall, Latin America and the Caribbean has maintained a strong agricultural surplus position although imports have tended to rise much faster than exports in recent years.

Agricultural Trading

And Sub-Saharan Africa has recorded wide fluctuations in its agricultural export-import ratio.

And recent trends suggest increasing difficulties for the region in maintaining its traditional net exporter status.

Here, Asia and the Pacific has moved into a net agricultural importer position since the mid-1970s.

And with a steady expansion of both imports and exports interrupted only during the first half of the 1980s.

And Finally, the Near East and North Africa, a net agricultural exporter during the 1960s.

Thus, has seen food import dependence soar during the 1970s and early 1980s.

And remain extremely high since then.

Hence, The agricultural trade gap widened dramatically in the oil-exporting countries in this region.

Thus, food deficits of a structural nature also emerged in several non-oil-exporter countries.

Diversifying markets and intensifying intraregional exchanges

Here, Two general tendencies have characterized the direction of agricultural trade flows during the past decades.

The first is a growing geographic diversification of exports.

Thus, imports and the second is the increasing intensity of exchanges within the individual regions.

Here, These general tendencies have been far from uniform. however, and have not resulted in large shifts in the overall patterns of agricultural trade.

And The developed countries’ agricultural trade has remained largely.

Thus, increasingly, self-centered, with the developing countries accounting for a declining share of total imports.

Hence, The developing countries, on the other hand, still depend to a very large extent on developed country markets troth as suppliers of imports and as outlets for exports.

Agricultural Trading

Agricultural Marketing In India

Here, India is an agricultural country and one-third population depends on the agricultural sector directly or indirectly.

And Agriculture remains as the main stray of the Indian economy since times immemorial.

Hence, Indian agriculture contribution to the national gross domestic product (GDP) is about 25 percent.

Thus, With food being the crowning need of mankind, much emphasis has been on commercializing agricultural production.

And For this reason, adequate production and even distribution of food have of late become a high priority global concern.

Here, Agricultural marketing is mainly the buying and selling of agricultural products. and In earlier days when the village economy was more or less self-sufficient the marketing of agricultural products.

Thus,  presented no difficulty as the farmer sold his produce to the consumer on a cash or barter basis.

Agricultural Trading

Here, Today’s agricultural marketing has to undergo a series of exchanges. Agricultural Trading.

And transfers from one person to another before it reaches the consumer. Agricultural Trading.

And There are three marketing functions involved in this, that is, assembling, preparation for consumption and distribution.

Thus, Selling on any agricultural produce depends on some couple of factors like the demand of the product at that time, availability of storage etc.

Here, The products may be sold directly in the market or it may be stored locally for the time being.

And moreover, it may be sold as it is gathered from the field or it may be cleaned, and graded and processed by the farmer or the merchant of the village.

Agricultural Trading

In India, there many central government organizations.

And who are involved in agricultural marketing like, Commission of Agricultural Costs and Prices, Food Corporation of India, Cotton Corporation of India, Jute Corporation of India, etc?

And  There are also specialized marketing bodies for rubber, tea, coffee, tobacco, spices, and vegetables.

Hence, Under the Agricultural Produce (grading and marketing) Act of 1937, more than forty primary commodities are compulsorily graded for export.

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And voluntarily graded for internal consumption. Agricultural Trading.

And Although the regulation of commodity markets is a function of state government, the Directorate of marketing and inspection provides marketing and inspection services.

Thus financial aid down to the village level to help set up commodity grading centers in selected markets. Agricultural Trading.

Agricultural Trading

Here, As we have a tradition of agricultural production, marketing, and allied commercial activities. Agricultural Trading.

And now it is the time for us to brainstorm and come out with new ideas of value-added services. Agricultural Trading.

And these value-added services will give the existing agricultural engine a new dimension. Agricultural Trading. 

The next logical step could be food-processing which not only could be another revenue generating area but also can provide lots of full-time employment to our youths.

And with the changing agricultural scenario and global competition. Agricultural Trading.

And there is a need of exploiting the available resources at maximum level. Agricultural Trading.

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