Commodity price volatility is smaller than stocks and bonds; thus, providing an efficient and diverse portfolio options for market participants
Being one of the most popular instruments for the majority of global investment managers, commodity transactions have resulted in a high turnover of money in the commodity market. Commodities can be interpreted as objects of physical substance and are divided into two, which are mining commodities, such as gold, silver, oil and others, and agricultural commodities, such as sugar, rice, cocoa, coffee and others. Commodities are easier to understand because a lot depends on the fundamental conditions of demand and supply. Commodity price volatility is smaller than stocks and bonds; thus, providing an efficient and diverse portfolio options for market participants. What makes commodities more attractive and riskier in transactions than stocks is the amount of leverage. However, the risks in commodity trading market are lesser than user-determined risks. JFX (Jakarta Futures Exchange) and ICDX (Indonesia Commodity & Derivatives Exchange), as futures exchanges in Indonesia, work to develop the futures market through a more dynamic, transparent, and liquid system. Moreover, multilateral transactions allow many parties to buy and sell financial instruments on an exchange through electronic means.
All futures contracts are traded on margin with a range of 2%10%
Contract Size: 1 Lot = 100 grams
For instance, the price of gold is Rp. 495,000.
Value of 1 Lot of GOLDGR: 100 grams x Rp. 495,000 = Rp. 49,500,000
Margin per lot 4%: 4% x Rp. 49,500,000 = Rp. 1,980,000, rounded up to Rp 2,000,000,-.
BUY position – buying a contract (investor wishes prices to go up)
SELL position – selling a contract (investor wishes prices to fall)
Offers producers the chance to hedge so they do not have to sell when prices are low. In addition, commodities can be a hedging option for other assets during inflation.
Since forever, gold has been trusted by market participants as a safe investment in hedging against anything, both in terms of economic, political, social crisis or currency crisis.
In volatile market conditions, investors will still opt to invest in gold and aim to sell it back to get a return on their investment.
CPO and Olein originate from the same plant, which is the palm species known as E. Guineesis. The plant grows in Southeast Asia, Africa, and Latin America, and has been consumed for more than 5,000 years.• CPO (palm oil) is extracted from the flesh of E. guineesis, using bright orange pressure due to the high content of carotene pigments. Palm oil is widely used in butter and margarine.• Olein is basically palm oil that is further processed to produce Olein and Stearin. Olein is a room temperature liquid that is very heat resistant. Golden color Olein is used as oil for frying.