Article by saurabh mittal

COMMODITYCommodity is basic very good utilised in commerce that is interchangeable with other commodity of the exact same form. Commodities are most frequently utilized as inputs in the production of other goods or services. The top quality of a given commodity may differ slightly, but it is essentially uniform across producers. In other words any great exchanged during commerce, which consists of goods traded on a commodity exchange.When they are traded on an exchange, commodities must also meet specified minimum standards, also recognized as a basis grade.COMMODITY TRADINGCommodity trading is the market place activity, which links the producers of the commodities effectively with their commercial customers. Commodity trading mainly takes location in the commodity markets exactly where raw or primary items are normally exchanged. The raw commodities here are traded on regulated commodities exchanges, in which they are bought and sold in standardized forms of contracts. In commodity market place, trading can be carried out in following methods:

Spot tradingSpot trading is any transaction where delivery either takes location quickly, or with a minimum lag among the trade and delivery due to technical constraints. Spot trading usually entails visual inspection of the commodity or a sample of the commodity, and is carried out in markets such as wholesale markets.

Forward contractsA forward contract is an agreement between two parties to exchange at some fixed future date a given quantity of a commodity for a price tag defined nowadays. The fixed value today is identified as the forward value.

Futures contractsA futures contract has the exact same common capabilities as a forward contract but is transacted via a futures exchange. In essence, a futures contract is a standardized forward contract in which the buyer and the seller accept the terms in regards to product, grade, quantity and location and are only totally free to negotiate the price tag.

COMMODITY TRADING IN INDIACommodity trading is an intriguing choice for those who wish to diversify from the customary possibilities like shares, bonds and portfolios. The Government has made almost all commodities permitted for futures trading. 3 multi commodity exchanges have been set up in the nation to facilitate this for the retail investors. The three national exchanges in India are:

Multi Commodity Exchange (MCX)National Commodity and Derivatives Exchange (NCDEX)National Multi-Commodity Exchange (NMCE)

Commodity trading in India is nonetheless calls for an aggressive growth strategy with innovative concepts. Liberal policies in commodity trading will undoubtedly enhance the commodity trading. The commodities and future market in the nation is regulated by Forward Markets commission (FMC).

Indian commodity marketplace can be broadly categorized into two parts:Wholesale marketRetail marketplace

WHOLESALE Marketplace

The wholesale marketplace in India, an important component of the Indian commodity market, traditionally consists of framers and manufacturers of goods. The lengthy approach of wholesalers acquiring from manufacturers then promoting it to retailers who in turn sell it to customers does not seem feasible today. An improvement in the transport facility has produced the interaction among the retailer and manufacturer easier the need for a wholesale market is gradually losing ground.


The retail market place in India is presently witnessing a boom. The growth in the India commodity industry is largely credited to this boom in the retail marketplace. Liberal government policies have ensured that this sector is growing at a great pace. Some of the reasons attributed to the growth of retail sector in India consist of the big population of the nation who has an improved buying power in their hand. Another factor is the heavy inflow of foreign direct investment in this sector. A lot more than 80% of the retail market in the country is concentrated in big cities.Till some months ago, this wouldn’t have made sense. Retail investors were not in a position to invest in commodities such as gold and silver in the futures market. This was almost impossible in commodities as there was practically no retail avenue for taking advantage in commodities.

However, with the setting up of 3 multi-commodity exchanges in the nation, retail investors can now trade in commodity futures without having having physical stocks.

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