Commodity market

Commodity markets are markets where raw or primary

products are exchanged It covers physical product (food, metals, electricity) markets but not the ways that services, including those of governments, nor investment nor debt, can be seen as a commodity. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.

List of traded commodity

Agricultural

Products:- Corn, Oats, Rough Rice, Soybeans, Rapeseed, Soybean Meal, Soybean Oil, Wheat, Cocoa, Coffee C, Cotton No.2, Sugar No.11, Sugar No.14. Livestock and Meat:- Lean Hogs, Frozen Pork Bellies, Live Cattle, Feeder Cattle. Energy:- WTI Crude Oil, Brent Crude, Ethanol, Natural Gas, Heating Oil, Gulf Coast Gasoline, RBOB Gasoline, Propane, Uranium. Precious Metal:- Gold, Platinum, Palladium, Silver. Industrial Metals:- Copper, Lead, Zinc, Tin, Aluminum, Aluminum alloy, Nickel, Aluminum alloy, Recycled steel.

History
The modern commodity markets have their roots in the

trading of agricultural products.

Wheat and corn, cattle and pigs, were widely traded using

standard instruments in the 19th century in the United States, other basic foodstuffs such as soybeans were only added quite recently in most markets.
For a commodity market to be established, there must be

very broad consensus on the variations in the product that make it acceptable for one purpose or another

 Historically, in ancient times Sumerian use of sheep or

goats, or other peoples using pigs, rare seashells, or other items as commodity money, have traded contracts in the delivery of such items, to render trade itself more smooth and predictable.
Classical civilizations built complex global markets

trading gold or silver for spices, cloth, wood and weapons, most of which had standards of quality and timeliness.

Size of commodity market

The trading of commodities includes physical trading of

food items, Energy and Metals, etc. and trading of derivatives exchanges increased by a fifth in 2010, and a half since 2008, to around 2.5 billion million contracts. During the three years up to the end of 2010, global physical exports of commodities fell by 2%, while the outstanding value of OTC commodities derivatives declined by two-thirds as investors reduced risk following a five-fold increase in value outstanding in the previous three years.

The global volume of commodities contracts traded on

 Trading on exchanges in China and India has gained in

importance in recent years due to their emergence as significant commodities consumers and producers. China accounted for more than 60% of exchange-traded commodities in 2009, up on its 40% share in the previous year.

Commodity assets under management more than doubled

between 2008 and 2010 to nearly $380bn. Inflows into the sector totaled over $60bn in 2010, the second highest year on record, down from the record $72bn allocated to commodities funds in the previous year. The bulk of funds went into precious metals and energy products. The growth in prices of many commodities in 2010 contributed to the increase in the value of commodities funds under management

Commodities trading
Spot trading
Spot trading is any transaction where delivery either takes place immediately, or with a minimum lag between the trade and delivery due to technical constraints. Commodity markets, on the other hand, require the existence of agreed standards so that trades can be made without visual inspection.

Forward contracts
A forward contract is an agreement between two parties

to exchange at some fixed future date a given quantity of

a commodity for a price defined today. The fixed price today is known as the forward price.

Hedging
Hedging, a common practice of farming cooperatives, insures against a poor harvest by purchasing futures contracts in the same commodity. If the cooperative has significantly less of its product to sell due to weather or insects, it makes up for that loss with a profit on the markets, since the overall supply of the crop is short everywhere that suffered the same conditions.

Largest commodities exchanges

Exchange CME Group Tokyo Commodity Exchange NYSE Euronext Dalian Commodity Exchange Multi Commodity Exchange Intercontinental Exchange Country USA Japan USA China India USA, Canada, China, UK

Indian commodity market

India commodity market consists of both the retail

and the wholesale market in the country.

The commodity market in India facilitates multi

commodity exchange within and outside the country based on requirements. Commodity trading is one facility that investors can explore for investing their money.
The India Commodity market has undergone lots of

changes due to the changing global economic scenario

Global Scenario
India's share in the global commodity market is not as big as estimated. Except gold the share in other sectors of the commodity market is not very significant. India accounts for 3% of the global oil demands and 2% of global copper demands. In agriculture India's contribution to international trade volume is rather less compared to the huge production base available.

Various infrastructure development projects that are being undertaken in India are being seen as a key growth driver in the coming days.

 The three national exchanges in India are:

Multi Commodity Exchange (MCX) National Commodity and Derivatives Exchange

(NCDEX)
National Multi-Commodity Exchange (NMCE)

Commodity Exchanges in India

MCX Multi Commodity Exchange of India Limited (MCX) is an independent and de-mutualised exchange with a permanent recognition from Government of India. NCDEX National Commodity & Derivatives Exchange Limited (NCDEX) is a public limited company in Mumbai and the only commodity exchange in the country promoted by national level institutions. It is managed by online multi commodity exchange.

NMCEIL National Multi Commodity Exchange of India Limited (NMCEIL) is the first demutualized, Electronic MultiCommodity Exchange in India INDIA BULLION MARKET Live price charts of Gold, Silver, Indian Rupee, Silver Rupees and Global Bullion news, stories.& graphs.

NCDEX Current shareholders

15%

12%

15%
16

12%

Why commodity exchange in India

47% of GDP is Commodity related 23% of GDP is from Agriculture

Over 65% of 1 trillion population depend on

agriculture directly Over 7500 physical market yards History of more than 150 years of derivatives trading

Commodity prices
commodity
Gold Silver Crude Oil Natural Gas Aluminum Copper Nickel Rs 21733 50397 4236 191.4 111.1 424 1034.5 Unit 10 grams kg barrel Mmbtu kg kg kg

Lead
Zinc

119.05
106.05

kg
kg