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Guide to Commodity Trading

A commodity is nothing but goods or assets that has importance in everyday life and can be exchanged for other commodities of the same type in commerce. Commodity is any sort of movable or exchangeable goods and assets except for money that can be bought and sold.

History of Commodity Trading in India

Commodity Trading has a long history tracing back more than 400 years. Osaka in Japan is known to have been trading commodity futures to trade rice. Commodity trading in India started with the formation of the Bombay Cotton Trade Association in India in 1875.

This has shaped the future of commodity trading in India with the country among growing markets in the world with around 20 exchanges trading over 40 commodities in early 2002. Nowadays commodity trading has become synonymous with derivatives seeing major volume since the turn of the century.

 

List of Commodity Exchanges in India

Commodity Exchanges City Year of Formation
Multi Commodity Exchange of India Ltd Mumbai 2003
National Multi Commodity Exchange Ahmedabad 2002
National Commodity and Derivatives Exchange Limited (NCDEX) Mumbai 2003
Universal Commodity Exchange Gurgaon 2013
Indian Commodity Exchange (ICEX) Gurgaon 2009
Shariah Index Mumbai 2010

Commodity Market Trading Timings in India

Below timings were announced in Oct 2018. These timings shall be revised in Nov 2019:

Session Start Time End Time (after end of US daylight savings in fall season)
Continuous Trading – Internationally referenceable Non-Agricultural Commodities 9:00 AM 11.55 pm
Trade Modification Timings   12:10 AM

What Are The Different Types Of Commodities

Enlisted down below are the different types of commodities

Let us discuss all of them in a little detail,

Agricultural Commodities

Agricultural commodities are those important sources of food that are required for either livestock or humans. For Instance, cardamom, cotton, crude palm oil, mentha oil, etc.

Base Metal Commodities

Base Metal commodities are those metals that are used in the manufacturing of other useful products like aluminum, aluminum minis, copper, copper minis, lead, lead minis, etc.

Bullion Commodities

Bullion Commodities include precious metals like gold and silver that are used for making jewelry. This type of commodity includes Gold, Gold Mini, Gold Guinea, Gold Petal, Gold Global, Silver Mini, Silver, Silver Micro, Silver 1000, etc.

Energy Commodities

Energy commodities include products that are used in the production of energy, like crude oil, crude oil mini, brent crude oil, and natural gas.

Best Commodity Brokers In India

Selecting the right commodity stockbroker is crucial for investment experience. And therefore we have listed down five best commodity brokers in India.

Risks of Investing in Commodities

When you are trading in Commodity Futures, it takes very less amount of money to hold a very large amount of commodity with the help of margin, which can help an investor make money but he can also lose a big amount as well.

Volatility Risk

Commodity Trading in India can be one of the most volatile asset class. It is considered more volatile than bonds, equities, and even currencies. For example, In the recent ongoing Trade War, the daily volatility of oil was around 30% while in the same period the currency market only saw volatility of 10%.

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Friday, 29 May 2020

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