Commodity Trading, means purchasing & selling of commodities through stock exchange. Generally, the most traded commodities are oil, gold and silver. supply and demand of commodities typically drive the commodity trading. On the demand side, global economic development and technological advances effects the commodity prices and it’s trading.Investing in commodities is the good way of diversifying the portfolio.
Traditionally, large businesses have been the main participants in the commodities market,but now a days retail investors also doing the commodity trading . businesses and companies need commodities to operate – clothing manufacturers require cotton, restaurants need cattle and construction companies need lumber etc.. One of the largest commodity exchanges is the New York Mercantile Exchange.
The term commodity defines as,”Anything movable (good),that is bought and sold”. A commodity is either grown or produced naturally in the environment.Commodity is nothing but an “raw material”.These are mostly used as inputs in the production of goods/services.These are essential building blocks of global economy.In quality perspective ,generally commodities are uniform,but has slightly difference.Commodities has to be tradable in the stock market and deliverable. Some examples of commodities include platinum, gold, cotton, wheat, cattle, lumber, oil, orange juice, pork bellies and sugar.
Commodity Exchange of India Ltd (MCX),is an independent commodity exchange platform in india. It was established in 2003 and is based in Mumbai. It is India's largest commodity derivatives exchange where the clearance and settlements happens.
Since September 28, 2015, MCX is being regulated by the Securities and Exchange Board of India (SEBI). Earlier MCX. was regulated by the Forward Markets Commission (FMC), which got merged with the SEBI on September 28, 2015.