What Is Commodity Market?

Commodity Market

A Market where commodities are traded is referred to as a commodity market. These commodities includes

• Bullions like Gold, Silver.
• Base Metals (non-ferrous) like Copper Nickel, Zinc, Lead, Aluminum.
• Energy like Crude Oil and Natural Gas.
• Agricultural Commodities like Soya Oil, Palm Oil, Coffee, Pepper etc.

Existence of a vibrant, active, liquid and transparent commodity market is normally considered as a sign of development of an economy. It is therefore important to have active commodity markets functioning in a country.

Markets have existed for centuries worldwide for buying and selling of goods and services. The concept of market started with agricultural products and hence it is as old as the agricultural products or the business of farming itself.

Traditionally, farmers used to bring their products to a central marketplace in a town or village where grain merchants or traders would also come and buy the products and transport, distribute and sell them to other markets.

In a traditional market, agricultural products would be brought and kept in the market and the potential buyers would come and see the quality of the products and negotiate with the farmers directly on the price that they would be willing to pay and the quantity that they would like to buy.

But Now, all these agricultural products can be easily traded on the commodity exchange between buyers and sellers.

There are 4 National-Level Commodity Exchanges and 22 Regional Commodity Exchanges in India.

National Level Commodities Exchanges in India are:

1. Multi Commodity Exchange (MCX)
2. National Commodity and Derivatives Exchange (NCDEX)
3. National Multi Commodity Exchange (NMCE)
4. Indian Commodity Exchange (ICEX)

Learn About Other Financial Terminologies:

• What are Derivatives?
• What is Money Market?
• What is Capital Market?
• What are Economic Indicators?

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