What is a Commodity?
The term commodity includes all kinds of goods. The Forward Contracts (Regulation) Act defines goods as 'every kind of movable property other than actionable claims, money and securities'. Futures trading is organized in goods or commodities that are permitted by the Central Government. The National commodity exchanges have been recognized by the Central Government for organizing trading in all permissible commodities which include precious (gold and silver) and non-ferrous metals; cereals and pulses; raw jute and jute goods; sugar, gur, potatoes, coffee, rubber and spices, etc
What are commodity futures?
Commodity Futures are contracts to buy specific quantity of a particular commodity at a future date. It is similar to the Index futures and Stock futures but the underlying asset happens to be commodities instead of Stocks and Indices.
The following factors have an impact on the commodity prices:
- Demand & Supply
- Natural Factors such as climatic conditions and natural calamities.
- Government Policies like EXIM Policies like tariff rates and minimum support prices.
- Annual production, consumption and carry-over quantity of stocks.
- Economic policies and conditions
- Interest Rates
What are the major commodity exchanges?
• Multi-Commodity Exchange of India Ltd, Mumbai (MCX).
• National Commodity and Derivatives Exchange of India, Mumbai (NCDEX).
• National Multi Commodity Exchange, Ahemdabad (NMCE).
What are the commodity derivatives market timings?
Monday to Friday: 10 am to 11.30 pm (Agri-commodities up to 5 p.m. only)
Saturday: 10 am to 2 pm
Is delivery of commodities available? Is it compulsory?
Yes, but its not compulsory, buyers and sellers intending to take/give delivery should express their intention to the exchange. The exchange will match delivery randomly and assign it accordingly.
