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What is Commodity – Commodity Market and Commodity Trading

What is Commodity - Commodity Market and Commodity Trading

What is a Commodity

A commodity is a trade market in which products or materials or physical substances can be brought or sold or there can be traded in various kinds of markets. It means the input and output of the market. i.e. bringing the materials into the market or trading company and selling them to the customers.there are several products in this. there may be primary materials or raw materials or the agricultural products or non-agricultural products. Commodities are the raw materials which will be used in our day to day life around the world. In commodity, a product has a commercial value in which it helps the economy. for easy understanding, commodity starts as any product in the market with a commercial value. For example, petrol is available at various stations it does not mean the price varies according to the station, all the stations have the same price regardless of the is sold for the basic price. one of the basic characteristics of a commodity is to maintained equality and the differentiation in the product. There are three major classifications of the commodity, there are energy, metals, agricultural and nonagricultural products. commodity provides a wide range of flow of regular income.

What is a Commodity market

commodity market, this term is often heard and discussed among the people in and out.  The word commodity means as the article of commerce which simply refers to selling and purchasing the products. it includes the transactions. And the world market means where the product is brought in to meet the detail the place where the supply of goods and services is carried out. a commodity market is a place where the commodity transactions are taken place. Here all types of primary products are traded. There are two categories of commodities, as follows hard commodities and soft commodities. Hard commodities refer to the goods which are extracted from earth’s crust like metals, ores, gold, silver, crude oil, and natural gas etc. soft commodities refer to all the agricultural products within its livestock, coffee, wheat, grains, soya, beans, pulses, and other domestic materials etc.  A commodity market is a place where investors meet the requirements and generate a surplus amount of money and income sources. Commodity market has two forms of ways that is the organized form which means commodity exchanges and the other form is the unorganized form which refers to the local mandis. When we talk about organized commodity markets in this there are two national commodity exchanges, one is MCX which means Multinational Commodity Exchange, the other one is NCDEX which means National Commodity and Derivatives Exchange. MCX deals with hard commodities and NCDEX deals with soft commodities. commodity market referred over equity markets.

What is Commodity trading

Commodity trading is as commodity marketing. trading commodities deal with the investment of money and money expenditure. In this, you can know products on which you have to invest. commodity trading requires standard agreements so that you can confidently execute the trade without any interference. Trading mainly depends upon the supply and demand of the customers. when the supply is more demand will be less and the price will be less. When the supply is low then there will be high demand and the price will be high vice versa.

There are four trading commodities that fall into this :

  • Metals such as gold, silver, platinum, copper, aluminum.
  • Energy such as crude oil, heating oil, natural gas, kerosene.
  • Livestock and meat which includes live cattle and feeder cattle and also pork.
  • Agricultural such as beans, wheat, grains, coffee, vegetables, sugar, pulses.

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