Commodities generally divided into four categories:
1. Agricultural: Food crops such as corn, cotton, and soybeans, livestock such as cattle, hogs, and pork bellies and industrial crops such as lumber, rubber, and wool.
2. Energy: The products include: crude oil, natural gas, heating oil, coal, ethanol and electricity
3. Metals: Precious metals such as silver, gold, platinum, etc., and base metals such as aluminum, nickel, steel, iron ore, tin, and zinc.
4. Environmental: In these category products such as carbon emissions, renewable energy certificates, and white certificates
Main drivers of Commodity Prices include;
- Emerging Market Demand
- US Dollar
Ways to invest in commodities include;
- Physical Delivery
- Options on Futures
- Commodity ETFs
- Commodity shares
- Contracts for Difference (CFDs)
There are some major commodity trading exchanges in India, as listed below.
- Multi Commodity Exchange – MCX
- National Commodity and Derivatives Exchange – NCDEX
- Indian Commodity Exchange – ICEX
- Ace Derivatives Exchange – ACE