Profile
Settings
Refer your friends
Sign out
A commodities market is a market that deals in raw materials rather than finished goods, such as cocoa, fruit, and sugar. Hard commodities, such as gold and oil, are mined. Futures contracts are the oldest form of commodity investment. Physical trading and derivatives trading using spot prices, forwards, futures, and options on futures are all examples of commodity markets. For millennia, farmers have employed a primitive kind of derivative trading in the commodity market to control price risk.
Commodities were first included in exchange-traded funds (ETFs) in 2003. Gold ETFs are based on “electronic gold,” which does not require the ownership of real metal, which comes with its own set of charges, such as insurance and storage in places like the London bullion market. According to the World Gold Council, exchange-traded funds (ETFs) allow investors to participate in the gold market without the risk of price volatility that comes with gold as a physical commodity.
Commodity Trading in India:
Commodity trade has a long history in India. Commodity trading in India began far earlier than it did in many other countries. Years of foreign domination, droughts, and periods of shortage, as well as government regulations, have all contributed to a decline in commodities trading in India.
In 2016, India had six national commodity exchanges, including the Multi Commodity Exchange (MCX), the National Commodity and Derivatives Exchange (NCDEX), the Indian Commodity Exchange (ICEX), the National Multi Commodity Exchange (NMCE), the ACE Derivatives Exchange (ACE), and the Universal Commodity Exchange (UCX) (UCX). Both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) began trading commodities in 2018.
The former Forward Markets Commission (FMC), which was established in 1953, was the regulatory agency. FMC amalgamated with the Securities and Exchange Board of India, or SEBI, in September 2015. SEBI has forced the withdrawal of various commodity exchanges as a result of this combination.
Multi Commodity Exchange:
The Multi Commodity Exchange of India Limited (MCX) (BSE: 534091) is an Indian commodity exchange. It is owned by the Government of India’s Ministry of Finance. It was founded by the Indian government in 2003 and is currently situated in Mumbai. It’s the largest commodity derivatives exchange in India. During FY2019-20, the average daily turnover of commodities futures contracts climbed by 26% to 32,424 crore, up from 25,648 crore in FY2018-19. In FY2019-20, the total turnover of commodity futures traded on the Exchange was 83.98 lakh crore. MCX offers gold options trading as well as non-ferrous metals, bullion, energy, and a variety of agricultural commodities futures trading (mentha oil, cardamom, crude palm oil, cotton, and others).
The Securities and Exchange Board of India has regulated the MCX since September 28, 2015. (SEBI). MCX was previously governed by the Forward Markets Commission (FMC), which amalgamated with SEBI on September 28, 2015.
Mr Padala Subbi Reddy (Mr P S Reddy) was appointed as the Company’s MD and CEO for a five-year term beginning May 10, 2019. Mr. Reddy formerly served as the managing director and chief executive officer of Central Depository Services (CDSL).
The following are some of the commodities that are traded:
Bullion – Gold, Gold Guinea, Gold Petal, Gold Petal (New Delhi), Gold Global, Silver, Silver Mini, Silver Micro, Silver 1000. Metal – Aluminium, Copper, Lead, Nickel, Zinc.
Cardamom, Cotton, Crude Palm Oil, Mentha Oil, Castor seed, RBD Palmolien, Black Pepper are examples of agricultural commodities.
Crude Oil and Natural Gas are both sources of energy.
Conclusion:
Commodity prices are determined by supply and demand. A commodity’s demand is directly proportional to its price, whereas its supply is inversely proportional to its price. Government policies, geopolitical conflicts, the global economy, production considerations, and other factors all influence commodity pricing.
Reduced rainfall in the country, for example, might decrease cotton supply and raise the global price of cotton in that year. Similarly, the introduction of electric vehicles may have an influence on fuel use, resulting in a price decrease.
The Multi Commodity Exchange of India Limited (MCX), India’s first listed exchange, is a cutting-edge commodity derivatives exchange that allows for online commodity derivatives trading and risk management. The Exchange, which first opened its doors in November 2003, is governed by the Securities and Exchange Board of India (SEBI).
