A commodity market is a place where one can trade in Agro Products, Precious Metals, Base Metals, and Energy Products. It is similar to an equity market, but in this case, one can buy and sell commodities.
The Commodity market exists in two forms-
Over the Counter (OTC) Market
Over the Counter- All the trading that takes place in these market is delivery based. A Spot contract is an agreement where delivery and payment either takes place immediately. A former sell his produce would go to the local ‘mandi’. and he can sell their produce in the market.
Exchange-based Market– It is similar to equity derivatives market where a person can purchase a contract by paying only a percentage of the contract value.
There are two commodity Exchanges in India
Multi Commodity Exchange (MCX)
National Commodity & Derivates Exchange (NCDEX)
Here we are discussing commodities trading on MCX
Its currently traded on the Indian commodity market include Gold and Silver.
Gold– Gold is the oldest precious metal, The trading unit of Gold is 1 kg and its base value is 10 grams. We can maximum order 10 kg in Gold.
Silver– Silver has innumerable application in Art, Science, Industry and beyond. It’s trading unit is 30 kg and its base value is 1 kg. We can maximum order can 600 kg in Silver.
Base Metals– Its include Nickel, Aluminum, Copper, led, Zinc.
Aluminium- It is a chemical element. It’s trading unit is 5 Tons and the base value is 1 kg. The maximum order can 150 MT.
Nickel– its trading unit and base values is 250 kg and 1 kg. The maximum order can 24 MT.
Zinc– It is fourth most widely used metal in the word after steel, aluminium, copper. The trading unit is 5 tons and the base value is 1 kg. the maximum order can 100 tons.
Agro Commodities– India is one of the world’s largest food grains producers, the second largest vegetable producer, and rice producer, making it one of the world’s agricultural powerhouses. An Indian commodity market trade in Crude Palm Oil, Cotton, Kapas, Cardamom, and Menthol oil.
Crude Palm Oil– Palm oil is a fatty edible vegetable oil. Palm oil is used in the manufacturing of soaps, ointments, cosmetics, detergents, and lubricants and also as cooking oil. The trading unit is 10 MT and Base value is 10 kg. The maximum order can 200 MT.
Cotton– Cotton is essentially grown for its fibre, which is used the world over to make textile. The trading unit is 25 bales (1 bale = 217 kg) and the base value is 170 kg per bale. The maximum order can 1200 bales.
Kapas– Kapas is unginned cotton or the white fibrous substance covering the seed that is obtained from the cotton plant. The trading unit 4 MT and base value is 20 kg. The maximum order can 100 MT.
Cardamom– Cardamom is widely used as spice, renowned for its flavour and aroma. The trading unit is 100 kg and base value is 1 kg. The maximum order can 5000 kg.
Menthol Oil– Mentha is an aromatic herb, which is used in food, pharmaceutical, perfumery, and flavoring industry. The trading unit is 360 kg and base value is 1 kg. The maximum order can 18000 kg.
Energy– Energy commodities include a number of different oil and gas products, such as natural gas and various grades of crude oil. These resources are critical to everyday life.
Crude Oil– Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits in natural underground pools or reservoirs and remains liquid at atmospheric pressure and temperature. The trading unit is 100 barrels and base value is 1 barrel (1 barrel = 159 liters). The maximum order can 10,000 barrels.
Natural Gas– Natural gas is a vital component of the world’s energy supply. It is one of the cleanest, safest, and the most useful of all energy sources. The trading unit is 1250 mmBtu (Contracts are measured in British Thermal Unit) and the base value is 1 mmBtu. The maximum order can 20,000 mmBtu.
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