Commodity derivatives market, Types of commodities traded in Commodity market, Commodity exchanges in India, Multi Commodity Exchange (MCX), National Commodities and Derivatives Exchange (NCDE), National Multi Commodity Exchange of India Ltd (NMCE), How to trade in commodity futures in India, Most active commodity on MCX, Benefits of Commodity Market, Precautions and Tips.

1. -KP

2. Commodity Derivatives Market
Unknown to us, the commodities that have always been a part of our day-to-day
existence are also one of the finest investment avenues available. The wheat in our
bread, the cotton in our clothes, our gold jewels, the fuel that runs our cars, etc; are all
traded across the world in major exchanges. Over the ages, commodities have been the
basis for trade and industry. They have spurred commerce, encouraged exploration and
altered the histories of nations. Today, they play a very important role in the world
economy with billions of dollars of these commodities traded each day on exchanges
across the world.

3. Commodity Derivatives Market
Commodity market is an important constituent of the financial market of any country. It
is the market where a wide range of products, viz., precious metals, base metals, crude
oil, energy, and soft commodities like palm oil, coffee, etc. are traded. It is important to
develop a vibrant, active and liquid commodity market.

4. Types of commodities traded
Commodities
Market
Agricultural
Products
Non
Agricultural
Products
Precious
Metals
Base Metals
Energy

5. Commodities Traded in Commodity Market
There are two different types of commodities : Agricultural commodities and non-
agricultural commodities
 Agricultural Commodities: These include grains and oilseeds (soybean, chana,
corn, groundnut etc.), jeera, turmeric, etc.
 Non-Agricultural Commodities: These include metals like gold, silver, copper etc.
These are classified as : Base metals, Precious metals, and energy.

6. AGRICULTURAL
PRODUCTS
BASE METALS PRECIOUS METALS ENERGY
Coffee Copper Gold Crude Oil
Sugar Lead Platinum Natural Gas
Cocoa Zinc Silver
Maize Tin Palladium
Soybean Aluminium
Jeera Nickel
Sunflower Oil
Turmeric
Cotton
Commodities Traded in Commodity Market

7. Commodity Exchanges in India
Currently, there are 24 commodity exchanges in India. The following are the three main
national-level exchanges.
 MCX
Multi Commodity Exchange, Mumbai
 NCDEX
National Commodity and Derivatives Exchange, Mumbai
 NMCE
National Multi Commodity Exchange of India Ltd, Ahmadabad

8. Commodity Exchanges in India

9. Multi Commodity Exchange
 MCX is India’s largest commodity exchange.
 MCX is popular for trading in metals and energy contracts.
 This exchange was originally promoted by Financial Technologies, a software
company in the capital markets space.
 It offers futures trading in bullion, non-ferrous metals, energy, and a number of
agricultural commodities.

10. National Commodity and Derivatives Exchange
 This exchange was originally promoted by ICICI Bank, National Stock Exchange
(NSE), National Bank for Agriculture and Rural Development (NABARD) and Life
Insurance Corporation of India (LIC).
 It commenced its operations on 15th December, 2013.
 NCDEX is popular for trading in agricultural commodities.
 It offers futures trading in 31 commodities.

11. National Multi Commodity Exchange of India Ltd
 This exchange was originally promoted by trader Kailash Gupta and Central
Warehousing Corporation (CWC) in 2002.
 It has its headquarters in Ahmadabad.
 NMCE offers trade in 44 different commodities. These range from copra to menthol.
NMCE is especially popular for trading in spices and plantation crops, especially those
from Kerala.

12. How to Trade in Commodity Futures in India
With the setting up of nation-wide multi-commodity exchanges, a new avenue opens up
for Indian investors. These exchanges have electronic trading and settlement systems
making it easy to trade in commodity futures. Trading in commodity futures comprises
of three simple steps.
 Step One: Choosing a Broker
 Step Two: Depositing the Margin
 Step Three: Access to Information and a Trading Plan

13. Most Active Commodity on MCX (Volume)
Commodity Volume ( in Lots)
Crude Oil 685,303
Natural Gas 113,151
Silver 67,928
Nickel 38,071
Gold 23,546
Zinc 18,354
Copper 13,420
Most Active Commodity on MCX (Volume)
As on 16 October, 2019

14. Benefits of Commodity Market
 Diversification
 Inflation Protection
 High Returns
 Liquidity
 Trading on lower Margin

15. Precautions/ Tips
 Stay away from Tips Providers and
Advisory firms
 Don't trade without Stoploss
 Never Overtrade
 Don't let emotions drive you
 Stop Dabba trading

16. Conclusion
Commodities Market is the market where a wide range of products, viz., precious
metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc. are
being traded. The growth of commodity market was remarkable during the last decade.
Prices of all commodities are heading northwards due to rapid increase in demand for
commodities. It is important to develop a vibrant, active and liquid commodity market.
This would help investors hedge their commodity risk. Value of contracts traded in
commodity market represents the demand for trading and the people awareness
regarding market. The inverse relation of commodity market with stock market shows
the alternative ahead investors whenever they feel bearish trend in the same.