Futures Trading in Soy Complex in India: A Primer for Novice Traders

Abstract

This paper gives an overview of the futures trading in Soybean, soy oil and soy meal, together called soy complex. Soy complex is a major constituent of the top three global exchanges,namely, Chicago Board of Trade and Chicago Mercantile Exchange in the U.S. and Dalian Commodity Exchange in China. Soy complex also accounts for one third of the daily trading volume on National Commodity and Derivatives Exchange in India. The growing financialization of commodity markets has given caused increase in prices and volatilities of all major commodities. Novice traders can benefit from the speculative trading by following two basic strategies- buy and hold and watch and trade. Buy and hold utilizes the seasonal fluctuations of prices with the crop cycle and watch and trade relies on price signals generated by overnight price spikes in the US market.