Commodity Market is that part of the market in which investors or individuals trade and take part in the primary economic sector rather than manufactured items. There are two types of commodities Hard and Soft Hard commodities such as Gold, Silver, Copper, Aluminium, Nickel etc and Soft commodities such as soybean, wheat, coffee, cocoa etc.
About fifty major commodity markets worldwide have purely financial transactions. The oldest way of investing in commodities is Futures contracts which are secured by physical assets commodity Index Fund is the whose assets are invested based on to a commodity index is called commodity index fund in every case the index fund is commodity future index. Then cash commodity refers to physical goods like wheat cotton sugar soybean etc which can be converted into cash or those commodities which are bought, sold or traded.
Some of the major Commodity exchanges are the Chicago Board of Trade Gold, Silver, soybeans, wheat, oats, rice, and ethanol then another one in New York board of trade where trading of commodities like coffee orange juice ethanol Commodities are traded electronically several U.S. exchanges still use the open outcry method of trading conducted outside the operation of the exchanges is referred to as the over-the-counter market.
There are some common terms related to Commodity market are commodity paper is a loan paper which involves raw materials owned by the borrower. Another type of commodity is exchange-traded commodities which were introduced in 2003 this term is used for exchange-traded notes and exchange-traded funds these provide exposure to many more commodities and indices.
In our country i.e India exchange or trading of Commodities is done in MCX .i.e Multi Commodity Exchange which was used in 2003 and is the biggest exchange in India based in Mumbai the Commodities traded here are In metal - Aluminium, Aluminium Mini, Copper, Copper Mini, Lead, Lead Mini, Nickel, Nickel Mini, Zinc, Zinc Mini,Brass(futures) in Bullion - Gold, Gold Mini, Gold Guinea, Gold Petal, Gold Petal ( New Delhi), Gold Global, Silver, Silver Mini, Silver Micro, Silver 1000 In agri-Cardamom, Cotton, Crude Palm Oil, Kapas, Mentha Oil, Castorseed, RBD Palmolein, Black Pepper and In energy-Brent Crude Oil, Crude Oil, Crude Oil Mini, Natural Gas.