Commodities Trading India 2023: Overview & Benefits of Investing in Commodities

Q: 1. What are commodity futures?

Ans. In India, commodities are traded on the spot market or the futures market. Spot markets allow for the instantaneous trade of commodities in return for money. Follow the prices of commodities in real time to learn how they fluctuate. In the futures market for commodities, buyers and sellers exchange a commodity based on a standardized contract that takes future prices into account. Futures contracts are traded electronically, and they can be paid in hard currency.

Q: 2. Can I get delivery against commodity?

Ans. Contracts for the delivery of products are commodity futures contracts. If there is enough delivery logic built into the contract design, you can receive product delivery against commodities futures contracts. The future price of a commodity is determined by the bids and offers made by commodity dealers, traders, and investors.

Q: 3. What are the trading hours for commodities trading in India?

Ans. The trade hours of commodity exchange in India from Monday to Friday are IST 10:00 a.m. to 11.30 p.m. / 11.55 p.m.*. You can get to know everything about commodity future live during the trade timings.

Q: 4. What are commodity exchanges?

Ans. The National Commodity & Derivatives Exchange Limited ( NCDEX ), The Multi Commodity Exchange of India Limited (MCX), and The Indian Commodity Exchange Limited (ICEX) are three examples of commodity exchanges in India. ICEX has merged with the National Multi-Commodity Exchange (NMCE).

Q: 5. How commodity trading is done?

Ans. A tradable commodity may be purchased and sold in the same way that shares or stock can be traded. You purchase a good in anticipation of a price increase. You sell it when the goal price is reached in the future. This is the way things are done. The sellers of a commodity, on the other hand, sell it when they believe there is little opportunity for price growth in the future. Create a Demat account right now.

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What is Commodity Trading?

Commodity trading refers to the profession of buying and selling goods made by nature or people for profit. Commodity trading is widely categorized into two parts: spot trading and futures trading.

Spot trading entails the cash-based purchase and sale of commodities at the going market rate. Contrarily, commodities trading are purchased and sold in futures trading at a predetermined price.

Just assume that you are buying an ounce of gold today and wagering that it will be worth more tomorrow than you paid for it today.

The danger that comes with trading commodities is the cause of this. You can purchase a futures contract that guarantees you a specific profit if the price rises and a certain loss if the price declines. Margin accounts are used by commodity traders to boost their leverage and trading opportunities for profit.

What are commodities?

Energy commodities, metals and non-metals, and agricultural goods are three categories into which commodities may be divided based on their uses. Coal and petroleum (sometimes known as crude oil) are two examples of energy commodities. Tin and copper are a few of instances of both metal and non-metal commodities. Rice and sugar are two examples of agricultural commodities.

Both cash and futures are used in the trading of commodities. But futures trading is the most popular method of commodity trading.

India has a broad and diverse array of commodities, including agricultural items like grains, sugar, rice, and maize; animal proteins like meat and dairy; metal ores like copper, lead, zinc, and iron; and petroleum products like crude oil and natural gas.

Commodity Trading in India

The spot market and commodity exchanges like NCDEX and MCX are two ways to trade commodities in India.

The Securities Exchange Board of India (SEBI), which oversees commodity trading in India, has established a distinct area inside the F&O (Futures and options) market for trading in commodity futures. India views commodity trade as speculative since the prices of commodities are sensitive to things like rainfall and weather patterns.

More so than by its use, the dynamics of supply and demand determine commodity pricing. Weather patterns and crop output are the two key factors that affect commodity prices.

A trader buys a commodity from one person or business and sells it to another person or business for profit on a commodities exchange. Orange juice, coffee, sugar, raw wool, cacao, copper, gold, and other products are exchanged. Commodities may occasionally be sold both as a physical commodity and as money. But the majority of them are marketed as tangible products.

FAQs – Commodities Trading India

1. What are commodity futures?

Ans. In India, commodities are traded on the spot market or the futures market. Spot markets allow for the instantaneous trade of commodities in return for money. Follow the prices of commodities in real time to learn how they fluctuate.
In the futures market for commodities, buyers and sellers exchange a commodity based on a standardized contract that takes future prices into account. Futures contracts are traded electronically, and they can be paid in hard currency.

2. Can I get delivery against commodity?

Ans. Contracts for the delivery of products are commodity futures contracts. If there is enough delivery logic built into the contract design, you can receive product delivery against commodities futures contracts. The future price of a commodity is determined by the bids and offers made by commodity dealers, traders, and investors.

3. What are the trading hours for commodities trading in India?

Ans. The trade hours of commodity exchange in India from Monday to Friday are IST 10:00 a.m. to 11.30 p.m. / 11.55 p.m.*. You can get to know everything about commodity future live during the trade timings.

4. What are commodity exchanges?

Ans. The National Commodity & Derivatives Exchange Limited (NCDEX), The Multi Commodity Exchange of India Limited (MCX), and The Indian Commodity Exchange Limited (ICEX) are three examples of commodity exchanges in India. ICEX has merged with the National Multi-Commodity Exchange (NMCE).

5. How commodity trading is done?

Ans. A tradable commodity may be purchased and sold in the same way that shares or stock can be traded. You purchase a good in anticipation of a price increase. You sell it when the goal price is reached in the future. This is the way things are done. The sellers of a commodity, on the other hand, sell it when they believe there is little opportunity for price growth in the future. Create a Demat account right now.