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Commodity trading:

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Commodity trading in India is regulated by the Forward Markets Commission (FMC) headquartered at Mumbai, it is a regulatory authority which is overseen by the Ministry of Consumer Affairs and Public Distribution, Govt. of India. It is a statutory body set up in 1953 under the Forward Contracts (Regulation) Act, 1952.
After equity trading, commodity trading is going to be the next big thing for investors. In India people have a love for Gold and Silver, trading is also going to pick up in Gold and Silver. Globally, the commodity trade market is about three times the size of equities trade market. In India, presently, the commodities market is still in a nascent stage and is gradually picking up taking a cue from global markets.

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Commodity:

 Any goods that are unbranded and are commonly traded in the market come under commodities.

Commodity trading

Commodity markets are quite like equity markets. The commodity market also has two constituents i.e. spot market and derivative market. In case of a spot market, the commodities are bought and sold for immediate delivery. In case of a commodities derivative market, various financial instruments having commodities as underlying are traded on the exchanges. It has been seen that traditionally in India people have hedged their risks with Gold and Silver.

Commodities future

Commodity future is a derivative instrument for the future delivery of a commodity on a fixed date at a particular price. The underlying in this case is a particular commodity.
If an investor purchases an oil future, he is entering into a contract to buy a fixed quantity of oil at a future date. The future date is called the contract expiry date. The fixed quantity is called the contract size. These futures can be bought and sold on the commodity exchanges.
The commodities include agricultural commodities like wheat, rice, tea, jute, spices soya, groundnut, coffee, rubber, cotton, etc, precious metals - gold and silver, base metals - iron ore, lead, aluminium, nickel, zinc etc, and energy commodities - crude oil and coal.
The number of retail investors participating in the market is increasing gradually after the introduction of commodities futures. The expected growth rate of commodity market is 40 percent annually over the next five years.

Benefits of Commodities Futures:

To producer: A producer of a commodity can sell the futures of the commodity, thereby ensuring that he can sell a particular quantity of his commodity at a particular price at a particular date.

To investors:
An investor has alternative investment instruments where he can take a position as to future price and the spot price at a particular date in future and buys and sells options. He is not interested in taking deliveries of the commodities.

To commodity trader: A commodity trader can use these to ensure that he is protected against any adverse changes in the prices. He can enter into a futures contract for purchase of a certain quantity of the underlying at a particular price on a particular date, or he can enter into a futures contract for sale of a particular quantity on a particular date at a particular price and be assured of the margins because both his purchase price as well as the sale price are fixed. Traders do a good arbitrage in Gold and Silver. Whenever they find Gold moving up, they short silver and similarly whenever they find silver moving up and gold likely to move down, they hedge.

To exporters: Future trading is very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market. Having entered into an export contract, it enables him to hedge his risk by operating in futures market.
Option trading in commodity is, however presently prohibited.

 

List of exchanges and their respective traded commodities is given below:

1.

Bhatinda Om & Oil Exchange Ltd., Batinda.

Gur

                                                         

2.

The Bombay Commodity Exchange Ltd.Mumbai

RBD Pamolein, Groundnut Oil, Sunflower Oil, CottonSeed, Safflower, Groundnut, Castor oil-Int'l, Castorseed, Cottonseed oil, Sesamum oil, Sesamum OilCake, Safflower, OilCake, Rice Bran, Rice Bran Oil, Rice Bran OilCake, Safflower Oil, Crude Palm Oil

3.

The Rajkot Seeds oil & Bullion Merchants` Association Ltd

Groundnut Oil, Castorseed

4.

The Meerut Agro Commodities Exchange Co. Ltd., Meerut

Gur

5.

The Spices and Oilseeds Exchange Ltd.
 

Turmeric

6.

Ahmedabad Commodity Exchange Ltd.

CottonSeed
Castorseed

7.

Vijay Beopar Chamber Ltd.,Muzaffarnagar

Gur
Mustard Seed

8.

India Pepper & Spice Trade Association.Kochi

Pepper Domestic-MG1
Pepper Domestic-500g/l
Black Pepper Int'l-MLS ASTA
Black Pepper Int'l-VB ASTA
Black pepper Int'l FAQ
Pepper 550 G/L
Rubber RSS4

9.

Rajdhani Oils and Oilseeds Exchange Ltd.  Delhi

Gur
Rapeseed/Mustardseed

10.

National Board of Trade. Indore.

Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Soy bean
Soy Meal
Soy Oil
Crude Palm Oil

11.

The Chamber Of Commerce.,Hapur

Gur
Rapeseed/Mustardseed

12.

The East India Cotton Association Mumbai.

Indian Cotton

13.

The Central India Commercial Exchange Ltd, Gwaliar
 

Gur
Rapeseed/Mustardseed

14.

The East India Jute & Hessian Exchange Ltd,

Hessian
Sacking

15.

First Commodity Exchange of India Ltd, Kochi

Copra
Coconut oil
Copra cake

16.

Bikaner Commodity Exchange Ltd.,Bikaner

Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Guarseed
Gram
GuarGum

17.

Esugarindia Limited.

Sugar Grade - M
Sugar Grade - S

18.

National Multi Commodity Exchange of India Limited.

Gur
RBD Pamolein
Groundnut Oil
Sunflower Oil
Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil
Rapeseed/Mustardseed oil-Cake
Soy bean
Soy Oil
Copra
CottonSeed
Safflower
Groundnut
Sugar
Sacking
Coffee-Robusta Cherry AB
Coconut oil
Castorseed
Castor-oil
Groundnut oilCack
Cottonseed oil
Sesamum (Til or Jiljili)
Sesamum oil
Sesamum OilCake
Safflower OilCake
Rice Bran Oil
Safflower Oil
Sanflower OilCake
Sunflower Seed
Pepper
Crude Palm Oil
Guarseed
CastorOil Cake
Cottonseed - Oilcake
Aluminium Ingots
Nickel
Vanaspati
Soybean Oilcake
Rubber
Copper
Zinc
Lead
Tin
Linseed
Linseed Oil
Linseed Oilcake
Coconut Oilcake
Gram
Gold
Silver
Rice
Wheat
Cardamom
Kilo - Gold
Masoor
Urad
Tur / Arhar
Moong
Rapeseed - 42
Raw Jute
Coffee-Arabica Plantation A

19.

Surendranagar Cotton oil & Oilseeds Association Ltd,

Kapas
CottonSeed
Cottonbales

20.

Multi Commodity Exchange of India Ltd.

Gur
RBD Pamolein
Groundnut Oil
Rapeseed/Mustardseed Oil
Pepper Domestic-MG1
Soy bean
Kapas
Soy Meal
CottonSeed
Turmeric
Castorseed
Castor-oil
Crude Palm Oil
Guarseed
Cottonseed - Oilcake
Nickel
Rubber
Copper
Tin
Gram
Sugar Grade - M
Sugar Grade - S
Gold
Silver
Gold-M
Rice
Wheat
Ref Soya oil - Indore
Urad
Tur / Arhar
GuarGum
Castorseed-5
Silver-M
Steel - Flat
Steel - Long
Yellow Peas
Long Staple Cotton
Medium Stapple Cotton
Castorseed - Disa
Mustard Seed
Guarseed Bandhani
Gold - HNI
Silver - HNI
Red Chilly
Maize
Guar Gum Bandhani
CASHEW KERNEL W320
Basmati Rice
Jeera
Mustard Seed Jaipur
Crude Oil
Sarbati Rice
Sesame Seed ( Natural 99.1)
Cotton Long Kadi
Cotton Med Abohar
Cotton Short Staple
Steel Long Bhavnagar
Mentha Oil

21.

National Commodity & Derivatives Exchange Ltd.

S06 L S Cotton Ahmedabad
J34 M S Cotton Bhatinda
Crude Palm oil - Kandla
RBD P'Olein - Kakinada
EXP R/M oil - Jaipur
Rape/Mustard seed - Jaipur
Ref Soya oil - Indore
Soy bean - Indore
Pure Gold - Mumbai
Pure Silver - New Delhi
Pure Gold - Mumbai - 1 Kg
Pure Silver - New Delhi - 30 Kg (Mega)
Rubber - Kottayam
Pepper - Kochi
Gram(Chana) - New Delhi
Guarseed - Jodhpur
Jute (B twill-665 Gms) - Kollata
Turmeric - Nizamabad
Castorseed - Disa
Raw Jute - Kolkata
GuarGum - Jodhpur
Sugar M Grade - Muzaffarnagar
Urad - Mumbai
Sugar S Grade - Vashi
Yellow Peas - Mumbai
Wheat - New Delhi SMQ
Soy Meal - Indore
SONA995MUM
CHANDIDEL
CottonKadi
CottonAbohar
Gur-chaku - Muzaffarnagar
Yellow Red Maize - Nizamabad
Grade A Raw Rice Delhi
Grade A Parboiled Rice Delhi
Common Raw Rice Delhi
Common Parboiled Rice Delhi
Mulberry Raw Silk
Mulberry Green Cocoons
Jeera Unjha
Chilli (Paala) Guntur
Mild Steel Ingots - Ghaziabad
Cashews W-320-Kollam
Whitish Sesame Seed - Rajkot
Cotton Seed Oilcake - Akola
Lemon Tur - Mumbai
Maharashtra Lal Tur - Akola
Arabica Coffee - Hassan
Robusta Coffee - Kushalnagar

22.

Haryana Commodities Ltd., Hissar

Rapeseed/Mustardseed
Rapeseed/Mustardseed Oil

23.

The Bullion Association Limited

 

24.

e-Commodities Ltd

 



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