1. Fundamental Analysis - Advance Level
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2. Disclaimer
This presentation is being provided solely for informational purposes. Mercantile Exchange Nepal Limited does not warrant the accuracy or completeness of any information provided in this presentation and such information is provided without any correctness or condition of any kind. Neither Mercantile Exchange Nepal limited nor any other person associated with the creation of this presentation or its contents shall be liable or responsible to any person for any harm, loss or damage that may arise in connection with the use of this presentation, including without limitation, any indirect, third party, or consequential damages.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

3. Precious Metal Gold Silver Platinum Palladium
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4. Base Metal
Copper
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5. Energy Crude oil Brent crude Natural gas Heating oil
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6. Agro Commodities Wheat Sugar Corn Soybean Soybean oil Cocoa Coffee
Cotton
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7. Gold Major Producers Major Consumer
China, United States, South Africa, Australia & Peru
Major Consumer
India ,China
Used for Jewelry followed by Investment, industrial, electronic and dentistry.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

8. Gold… Data to watch State of US and Euro zone economy
Factors that affect the US dollar
Demand of jewelry in Indian and Chinese market
Interest rate policy of major economies around the globe
IMF announcement regarding it’s gold holdings
Seasonal factors
During the festival season in India and China, price tend to normally rise.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

9. Silver Major Producer Major Consumer US, China, Mexico
US, Mexico, Canada, Peru, Russia and Australia
Major Consumer
US, China, Mexico
More than two third of silver is the by product of lead, copper and zinc.
Data to watch
US Dollar affect the price of silver
Any major change in US economy is important for price of silver
Silver is highly correlated to the price of gold.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

10. Palladium Major Producer Russia South Africa Major Consumption
Norilsk Nickel mine
Gorkhran and
Russian central bank
South Africa
Major Consumption
Automotive, dental and electronic purpose
Nearly half of the palladium production goes to production of auto catalysts in automobile sector
Palladium demand is correlated to the health of auto industry
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

11. Palladium.. Data to watch
It is necessary to follow mining news from the major producers
Any major change in the automobiles sector
News regarding palladium stock with Russia and South Africa
Russia is the only country which holds significant stock of palladium. Russian government export policies have significantly influenced world palladium supply and prices volatility.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

12. Platinum Major Producer Major Consumer
South Africa and Russia
Major Consumer
Japan, US, EU and China
Platinum is integral part of the production for 20% of all consumer goods.
mainly used to make jewelry, manufacturing laboratory equipment, electrical contacts, dentistry equipment and other devices.
Japan consumes 85% of the platinum jewelry that is produced in the world.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

13. Platinum… Data to watch
Over 90% of platinum production totally depends upon the four major mines
Rustenburg (South Africa),
Impala (South Africa),
Lonrho (South Africa) and
Norlisk (Siberia).
Policies of South Africa and Russia
Size of Russian stock for platinum
Economic situation in the consuming countries like Japan, U.S and E.U.
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14. Copper Copper Major Producer Major Consumer
Chile, USA, Indonesia, Peru and China
Major Consumer
China, USA and Euro zone
Copper is commercial metal which is used by housing, automotive and electrical industries. So its demand is affected by the general state of major copper consuming economy
Copper prices tend to be strong in the early spring in the US due to the purchase of copper by the housing and automobile industries for their peak production levels during late spring and summer.
After the peak demand during late spring in the US, copper demand declines during the summer, and prices soften during the summer and fall.
Chinese Industrial and Economic/Interest Rate data also tend to have a strong impact on Copper prices.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

15. Crude Oil Crude oil Major Reserve Largest Producer Major Consumer
Saudi Arabia, Iraq, Canada, Iran and Kuwait
Largest Producer
Saudi Arabia, Russia, US, Iran
Major Consumer
US, China, Japan, Euro zone
OPEC countries control 40% supply of crude oil globally.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

16. Crude Oil… Data to Follow
The American Petroleum Institute (API) report
Energy Information Administration (EIA) report
If any major disruption in supply occurs, there will be upward pressure on prices.
Geopolitical tension in major oil producing countries also affects the price of crude oil.
Weather condition also affects the price of crude oil. During American winter, weather forecasts affect the price of crude oil.
Almost all oil deals worldwide are priced in US dollar and dollar devaluation puts pressure for higher oil prices.
Major announcements by OPEC and IEA (International Energy Agency).
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

17. Crude oil… OPEC (Organization of Petroleum Exporting Countries)
OPEC countries hold 81.33% of global oil reservoir.
Global oil production is controlled by the OPEC decision.
OPEC meeting, its agenda and outcome usually shake the oil prices
OPEC can affect the oil price by regulating the volume of production.
Disputes among the member nation also impact the oil price.
Major Publication
OPEC bulletin – Monthly publication
Monthly oil market report
World oil outlook
Annual statistical bulletin
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18. Brent Crude Production Consumption
North Sea
Consumption
UK, Norway, Denmark, Netherland and Germany
Used as the pricing benchmark for deliveries from Europe or bound to Europe.
The refineries for Brent crude are located in Northwest Europe.
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19. Brent Crude… Data to watch
Brent accounts for less than 1% of global oil production
However, it determines the price of more than 60% of internationally traded crude oil
Oil produced from Europe, Middle East and African countries tend to be priced relative to Brent crude.
There is generally negative correlation between Brent crude and US dollar
There is positive correlation between WTI and Brent. However, the volatility differs.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

20. Natural Gas Major Producer Major Consumer
Middle East, Russia and Europe
Major Consumer
USA
It is the main source of energy for daily needs and activities and is the major component of worlds energy supply.
Data to watch
Getting updates from the US Department of Energy, as U.S. is the world’s largest consumer of natural gas
Any negative/positive news in natural gas mines affects the price of natural gas
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

21. Heating Oil
When crude oil is refined, then 25% of the oil becomes heating oil.
USA is the world largest heating oil consumer and also produces 85 percent of its requirement.
Heating oil is high on demand during the American winter season.
Heating oil prices generally follow crude oil prices.
Data to follow
EIA weekly report.
Heating oil is mainly used during the winter. So it’s important to keep eye on the weather during the month of December, January and February.
Major portion of the heating oil is consumed in the Northeast part of US. So it’s important to focus on the weather of Northeast of US.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

22. Agro Commodities Wheat Major Producer Major Consumer Data to watch
China, India, US , Russia
Major Consumer
EU, China, India, Russia, US, Pakistan
Data to watch
News released by United States Department of Agriculture (USDA).
Weather conditions in China, U.S., India, Russia and other major wheat producing countries 
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23. Sugar Major Producer and Consumer
Brazil, India, China and Thailand
Around 79% percentage of sugar is made from sugar cane.
 Any news coming out of the largest producing and consuming countries have an effect on the price of the sugar.
Updates from U.S. Department of Agriculture
Tracking the weather pattern in the major sugar producing countries as weather affects the production of sugar
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

24. Corn Major producer Major Consumer
USA, China, Brazil and Europe
Major Consumer
Japan
USA is the largest exporter of corn accounting more than half of global export.
It’s important to follow the major corn activities in USA.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

25. Soybean Major Producer Major consumer
Brazil, Argentina, China
Major consumer
USA
Soybean is used for extracting soybean oil
Getting updates of United States Department of Agriculture
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26. Soybean Oil Major Producer Major Consumer
USA, China, Argentina, Brazil
Major Consumer
India, China, Pakistan, Bangladesh, Iran, South Korea and European Union
Soybean oil is produced from soybean.
Data to watch
Soybean oil is mainly used by the food industry in a variety of food products like bread, mayonnaise, non-dairy coffee creamers, salad dressings, sandwich spreads, and snack foods.
Production quantity of soybean and demand of soybean oil in soybean producing and consuming countries respectively.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

27. Cocoa Major Producer Major Consumer
Ivory Coast, Ghana, Indonesia, Nigeria and Brazil.
Major Consumer
USA and Netherland
Europe, North America, Japan and Singapore are main consumer of cocoa in global market
Data to follow
World largest producer of cocoa Ivory Coast and Ghana are unstable countries. Political, Social and Labor issue regularly threatens to decrease and disrupt the supply of cocoa.
Black Pod disease is the main threat to cocoa. A major outbreak of this disease can move the price of cocoa to higher level.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

28. Coffee Major Producer Major Consumer
Brazil, Vietnam, Colombia, Indonesia and Mexico
Major Consumer
USA, Germany, Japan and Italy
There are two main species of coffee beans grown worldwide
i.e. Arabica and Robusta.
Brazil produced more than one third of the global coffee supply
i.e. almost three times more than 2nd largest coffee producing country.
So it’s quite important for investor to keep an eye on the Brazil coffee industry.
Even small incidents can hamper the world coffee production and supply.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

29. Cotton Major Producer Major Consumer
China, India, US, Pakistan, Brazil
Major Consumer
China, Turkey, Vietnam, Mexico
Climate of the major producing countries affect the cotton production consequently affect the cotton price.
Use of synthetic fiber is major competition for the demand of cotton.
Major producer shifting to synthetic fiber can have effect in the demand of cotton.
Cotton seed prices affect the market.
Rise in the cotton seeds shifts farmer to other cash crop and shortage of cotton.
RESEARCH & DEVELOPMENT DEPARTMENT, MEX. ALL RIGHTS RESERVED

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