Benefits investing comodity market

    A physical or virtual marketplace for buying, selling and trading raw or primary products. For investors' purposes there are currently about 50 major commodity markets worldwide that facilitate investment trade in nearly 100 primary commodities.

      Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.)

      The commodities markets are one of the oldest prevailing markets in the human history. In fact, derivatives trading started off in commodities with the earliest records being traced back to the 17th century when rice futures were traded in Japan. India, being an agro-based economy, has markets for most of the agro-based commodities. India is the largest consumer of gold in the world, which implies a huge market for the yellow metal. India has huge spot markets for all these commodities.During the pre-Independence era, India also had a thriving futures market for commodities such as gold, silver, cotton, edible oils, etc. In mid-1960s, due to wars, natural calamities and the consequent shortages, futures trading in most commodities was banned.

Different types of commodities that are traded in these markets

• Precious Metals: Gold, Silver, Platinum, etc.
• Other Metals: Nickel, Aluminum, Copper, etc.
• Agro-Based Commodities: Wheat, Corn, Cotton, Oils, Oilseeds, etc.
• Soft Commodities: Coffee, Cocoa, Sugar, etc.
• Live-Stock: Live Cattle, Pork Bellies, etc.
• Energy: Crude Oil, Natural Gas, Gasoline, etc.

Commodity trading is an interesting option for those who wish to diversify from the traditional options like shares, bonds and portfolios. The Government has made almost all commodities entitled for futures trading. Consequently four commodity exchanges have been approved to commence business. They are:

• Multi Commodity Exchange of India Ltd (MCX), located at Mumbai
• National Commodity and Derivatives Exchange Ltd (NCDEX), located at Mumbai
• National Board of Trade (NBOT), located at Indore
• National Multi Commodity Exchange (NMCE), located at Ahmedabad.
  
  

     Benefits of investing in commodity market

• A Safe Refuge during Crisis
• Diversified Investment Portfolio
• Transparency in the Process
• Profitable Returns
• Protection against Inflation
• Trading on Lower Margin