MCX Commodity Market In India

Lets understand commodity market in India and how to trade on mcx commodity exchange. Become a professional trader in just 3-4 months.

Commodity Market in India

Commodity market is commonly referred as physical commodity market in India for food, grain, metals and other items. Which can we can buy, sell and consume. However, there are two types of commodity market:

1) Physical commodity market: This market is also referred as spot market. This is 100% over the counter (OTC) This is the place where we normally go and buy in wholesale. There are small commodity market and large commodity markets in India also referred as Mandi.
We have 470 mandis in 14 states connect to National agricultural market (eNAM) across India. Only, Agro crop contribute 15 lac 30 thousand to GVA per year. Below, I’m sharing Table 1.3 to know total Gross value added by commodity market in India.

2) Commodity Derivatives (Contracts): These are also referred as physical derivatives, these are buyer-seller agreements based on any commodity, when we need a commodity in future and we want to fix the price today. We pay advance, get into a commodity derivative contract and ask supplier to delivery on a future date.
Benefit of these contracts are you ensure delivery on a fixed date and also save your self from future price volatility. No matter, what the future price will be, you’ll receive commodity as per the price mentioned in the commodity contract.
These commodity derivatives are traded on OTC market and NCDEX / MCX commodity exchange in India. The turnover on commodity exchange is approx 12 times more than total yearly production of commodities in India. Highest daily turnover only on MCX reached 1,19,941 crore in a day. So, one negative side is now commodity derivatives are affecting spot price.

commodity market in india

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Commodity Market : Online Trading

We can do commodity trading online sitting at home on an online commodity exchange. These commodity exchanges give you facility to trade over 30 commodity derivatives with a minimum investment. You’ll need a commodity trading account, here is a link open free commodity trading account. Discount code: STXFREE.

There are two major online commodity markets in India MCX and NCDEX. MCX commodity exchange has high trading volume for metals and energy, so its good to trade metals and energy on MCX. Whereas, NCDEX is good for agricultural commodities, due to it’s wide reach in commodity markets in India.

MCX Commodity Exchange

MCX or Multi-Commodity Exchange started it’s operations in Nov’2003, it is based in Mumbai. It is also a public limited company listed on BSE.

It had a global ranking of 7th in terms of trading volume in 2017. It was world No 1 in Silver trading and No. 2 in gold & crude oil trading in 2011.

Market Timing: 9:00 AM to 11:30 PM

List of Commodities Traded on MCX Commodity Market

Here, is complete list of commodities trader on mcx commodity exchange.

Agricultural Commodities: Black Pepper, Cardamon, Caster seed, Cotton, Kapas, Mentha Oil, Palm oil, RBD Palmolien
Energy: Crude Oil, Natural Gas
Base Metals: Aluminium, Brass, Copper, Lead, Nickel, Zinc
Bullion: Gold, Silver

NCDEX Commodity Exchange

NCDEX or National Commodity & Derivatives Exchange is 2nd largest commodity market in India. It started operations in April’2003. NCDEX is also based in Mumbai. It is being promoted by NSE, LIC and NABARD.

NCDEX is more popular among agro commodity traders, due to 215 warehouses at 39 location in India. You can take physical delivery of agro commodities from NCDEX commodity exchange.

Market Timing: 9:00 AM to 11:30 PM

List of Commodities Traded on NCDEX Commodity Market

As discussed before NCDEX commodity exchange has only agricultural commodities listed:

Cereals and Pulses: Bajra, Barley, Chana, Maize Feed, Wheat, Moong, Paddy (Basmati)
Fibres: Kapas, 29 mm Cotton, Guar Complex,
Guar Seed, Guar Gum
Oil and Oil seeds:
Castor Seed, Cotton seed oilcake, Soy Bean, Refined soy oil, Mustard Seed, Crude Palm Oil
Soft: Sugar
Spices: Pepper, Turmeric, Jeera, Coriander

List of MCX Commodity Derivatives And Commodity Margins

When we trade commodity derivative (future contract), we don’t have to pay total value. We only pay margin amount to buy or sell. Most of the commodity future contract has a margin between 5% to 20%. The margin keeps on changing as per price volatility of a commodity.
Here is a basic list of mcx commodities and commodity margin for various commodity future contracts as on 3rd-Apr-2020. The margin is relatively higher due to high volatility in this month.

CommodityLot SizePriceTotal ValueMargin%Margin Amount
COTTON25 BALES16320/B4080009.25%37740
GOLDM100 GRMS42666/10gm42666011.49%49023

Factors Affecting Commodity Prices

There are broadly two types of commodities – consumption commodities like wheat, sugar, copper and investment commodities like Gold and silver.

There are various factors affecting these commodities, if you want to do commodity trading, you have to be very good in analyzing these factors. I’m listing few below:

Agro Commodities: Mostly weather conditions, seasonality, export-import policies, supply & demand, cartels in mandis, duties, other countries.
Bullion: This is affected by various international economic conditions and dollar, crude price movement. Study is very vast and deep.
Base Metals: Mostly affected by mining, supply, demand and industrial growth.
Energy: This is affected by weather, population growth, government restrictions, economic condition in middle east countries, mining, automobile sector growth and supply.

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