Commodity Trading

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;

  1. Emerging Market Demand
  2. Supplies
  3. US Dollar
  4. Substitution
  5. Weather

Ways to invest in commodities include;

  • Physical Delivery
  • Futures
  • 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


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