Commodity trading has been done in India since ages. India was one of the major destinations of commodity trading since few centuries and it has continued to be one of the destination in todays date also. Commodity is asset class which is traded for profit gaining purposes through price fluctuations. It included different type of commodities which are traded all over the world.
Benefits of Commodity trading with Mangal keshav:
- Multiple Access points for commodity exchanges
- User friendly trading platforms
- Access to all key exchanges
- Strong back office support.
Categories of Commodities
Commodity trading market is broadly categorised into few categories. These include, Metals, Energy and Agriculture. Let us elaborate each one of them in brief
Metals- Metals are considered as the key raw material and find usage in various manufacturing activities all around the globe. These metals are made available by nature in various forms in many countries. Most of these commodity trading economies have abundant resources to market it and sell it across the globe. Rising manufacturing and industrial activity has played major factor in metals commodity trading. These specifically include Silver, Gold, copper, aluminium, platinum, etc. These key metal commodities are traded on the exchanges
Energy- Energy is base material to any activity around the world. Also, the resources available for energy extraction are limited and with handful of countries only. The demand and supply of these commodities derives the price of it. These commodities largely include crude oil, natural gas, gasoline and heating oil, etc.
Agriculture & livestock- Food is another major commodity which is traded all over the world and like other two categories its resources and manufacturing is available to certain countries with certain categories. Each agriculture commodity cannot be produced everywhere in the world as each agricultural commodity has its own characteristics of growing in specific climate. These agricultural commodities broadly include corn, soyabean, wheat, rice, beans, tea, coffee, cotton and sugar. In livestock pork, beef, cattle are the major meat commodity in the market.
Benefits of commodity trading
Commodities are essential part our daily life unlike other investment classes like stocks, bonds etc. The change in demand and supply of any of the commodity could play as a disruption and change the dynamics of the commodity market and price. Commodity market in India is very much buoyant with many exchanges providing commodity trading in India. Investors turn their cash towards commodity trading when the volatility in equity market is at peak and there are very less opportunitites available in cash market too invest. In such times people invest their money into commodities like gold which are sought to be safe havens. Also, price disruptions caused by demand supply mismatch gives opportunity of price gains in commodity trading.
Who are commodity exchanges?
Commodity exchanges are key market places where commodity contracts are traded. In India there are close to 6 commodity exchanges.
- Multi Commodity exchange (MCX)
- National Commodity derivative exchange ( NCDEX)
- National Multi commodity exchange ( NMCE)
- Indian commodity exchange ( ICE
- Ace Derivatives exchange ( ACE)
- Universal commodity exchange (UCX)
Apart from this London commodity exchange is one of the major global commodity exchange which is considered for prices and fluctuations. These exchanges are monitored by SEBI after forward market commission a commodity trading body merged in 2015.
How to Invest in Commodities
Commodities as investment or asset class can be used for trading via future contracts. A future contract is agreement to buy or sell the specific quantity of commodity at the price set at a future time. Traders use the commodity contracts as prevention for risks associated with price fluctuation of futures of implied goods or commodities. The futures contracts are one of best opportunity to generate great profits as they are highly liquid and are leveraged instruments. Manufacturers and producers of the commodity use futures as hedging strategy to reduce the cashflow expenses. These contracts help the commodities manufacturers to reduce the losses caused by change in prices.
Each of the different commodity trading requires a futures trading account with the brokerage. Each commodity contracts requires minimum deposit in the account and the amount increases in relation to underlying contract. Due to huge leveraging in the commodity trading the little price movement might result into huge profits and losses. However, the commodity trading provides a good hedging strategy for traders and investors amid volatile stock market conditions. There are more than 100 types of commodities traded on exchanges with more than 50 actively traded on exchanges such as bullion, metals and agricultural
Ask for the commodity trading facility with your broker now to benefit from commodity trading.
