COMMODITY EXCHANGE

MARKET
 Introduction:
• What is a commodity?

• Commodity Exchange Market -A commodities exchange is an

exchange where various commodities and derivatives products
are traded.

• Trading in a commodity market : Spot, Forward, Future and

Options

• Commodity Exchange markets in India:

NMCE
MCX
NCDEX
 Commodity Risk
• Commodity Risk - Commodity risk refers to the uncertainties
of future market values and of the size of the future income,
caused by the fluctuation in the prices of commodities
i. Price risk (Risk arising out of adverse movements in the
world prices, exchange rates, basis between local and world
prices)
ii. Yield Risk/Production Risk
iii. Political risk
 Impact of Commodity risk:
 Producers of commodity
 Wholesale buyers and retailers
 Exporters
 Government
 Managing Risk
• Transfer of risk via Derivatives

• Long term Supply Contracts

• Vertical Integration

• Diversification of business
Sectors which trade in commodity Market
• Agricultural (grains, and food and fiber):Corn,Soyabean,rough rice,Wheat etc

• Livestock and meat:Live Cattle, Lean Hogs etc

• Energy :Crude oil,Ethanol,Natural Gas etc

• Precious metals:Gold,platinum,silver etc

• Industrial metals:Copper,lead,tin,aluminium,zinc etc

• Rare metals:Cadmium, Chromium, Magnesium etc

• Other minerals and materials:Asphalt, Aggregate, Arsenic, Borax