what is Commodity market trading?
A commodity market is a market that trades in the primary economic sector, soft commodities like cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil.
Raw commodity
Future contracts
Mining gold & silver etc oil and gas
Soft commodities:
agri products
commodity trading hours in india
9am to 5pm
gold market opening time india
23 hours a day, gold &silver.
closed from 9pm to 10pm GMT daily.
objectives of commodity market
Not for making money.
open platform for the interaction of free play of the forces of demand and supply.
six major commodity trading exchanges in India as listed below.
50 well-known commodity markets globally
1. Multi Commodity Exchange – MCX
2. National Commodity and Derivatives Exchange – NCDEX
3. National Multi Commodity Exchange – NMCE
4. Indian Commodity Exchange – ICEX
5. Ace Derivatives Exchange – ACE
6. The Universal Commodity Exchange – UCX
1. Metals – Silver, Gold, Platinum, and Copper
2. Energy – Crude oil, Natural gas, Gasoline, and Heating oil
3. Agriculture – Corn, Beans, Rice, Wheat, etc.,
4. Livestock and Meat – Eggs, Pork, Cattle, etc.,
What is a future contract?
an agreement to buy/sell a specific quantity of commodity in future.
this contract avoids price swing in future.
commodity market highly volatile.
Commodity ETFs
group of commodities in a exchange just like ETF.
ETN: Exchange traded Notes just like a Note.just like debt bonds has an expiry date. Guaranteed by issuer.
Types of commodities traded in India (MCX):
Bullion: Gold, Silver
Base Metals: Aluminum, Brass, Copper, Lead, Nickel, Zinc
Energy: Crude oil, Natural gas
Agri commodities:Black pepper, Cardamom, Castor seed, Cotton, Crude palm oil, Mentha oil, Palmolein, Rubber
List of commodities traded in India (NCDEX):
Cereals and pulses: Barley, Chana, Maize kharif/south, Maize rabi, Wheat, Moong, Paddy (basmati)
Fibres: Kappa’s, Cotton
Guar seed, Guar gum
Oil and Oil seeds:
Castor seed, Cotton seed oil cake, Soybean, Refined soy oil, Mustard seed, Crude palm oil
Soft: Sugar
Spices: Pepper, Turmeric, Jeera, Coriander
Most traded commodities
crude oil, gold, soybeans(bio diesel demand)
Participants of commodity market
Speculators /
Buys future contracts at low and sells at high
Large speculators: mutual fund houses, foregin institute investor etc
Small speculators: individual investors
Hedgers /commercials
producers, manufacturers reduce their risk by future contracts.
commercials holds majority of the market ex: wheat former.
What is a future contract
a future contract: wheat ₹20kg(agreement between farmer& buyer) in future, incase of price drop ₹10 the farmer /seller get compensate.
after the crop, the local price may go high.₹30. but at least he reduced risk of loss.
Risk associated with Commodity market is higher.
Gold bonds vs commodity gold
Gold’s bonds are traded in equity market bse,nse,. While gold as a commodity traded in ncdex and mcx etc.
Commodity market vs equity
commodities are less riskier than equity infact 14%.
Top traded commodities
* Gold
* Crude oil
* Copper cathode
* Silver
* Zinc
* Nickle
* Natural Gas
* Farm commodities
can I trade in commodities with existing broker Account?
Some trading accounts have ,some doesn’t within same brokers
Like sbi cap, zerodha ,icici ,hdfc etc.
Is Commodity market good for making money?
It’s take some experience to become an expert. The market opportunities may attract some profit to traders.
Advantages of commodity trading?
23 hours a day global exposure.
Seasonal patterns easily tracked
Lower transaction cost
Higher diversification and leverage.
Commodity vs forex trading
5 days in a week, based on
https://www.karvyonline.com/knowledge-center/beginner/types-of-commodity-market
commodity lot size list and margin
4% general rule,
broker margin based on holdings general 5%.
