COMMODITIES

The commodities market is a global marketplace where raw or primary products are exchanged. Commodities are often divided into two main categories: hard commodities, which include natural resources that must be mined or extracted (such as gold, rubber, and oil), and soft commodities, which are agricultural products or livestock (such as corn, wheat, coffee, sugar, soybeans, and pork).

Key Components of the Commodities Market

  1. Types of Commodities
    • Energy: Includes crude oil, natural gas, gasoline, and heating oil.
    • Metals: Includes precious metals like gold, silver, platinum, and palladium, and base metals like copper, aluminum, zinc, and nickel.
    • Agricultural Products: Includes grains (corn, wheat, soybeans), soft commodities (cotton, coffee, cocoa, sugar), and livestock (cattle, pork bellies).
    • Others: Includes rubber, palm oil, and other niche commodities.

Structure of the Commodities Market

  1. Commodity Exchanges

    • Global Exchanges: New York Mercantile Exchange (NYMEX), Chicago Mercantile Exchange (CME), London Metal Exchange (LME), Intercontinental Exchange (ICE).
    • Indian Exchanges: Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), Indian Commodity Exchange (ICEX), National Multi-Commodity Exchange (NMCE).

  2. Over-the-Counter (OTC) Market

    • OTC trading involves direct transactions between two parties and is not standardized like exchange-traded contracts.
    • Offers flexibility in terms of contract size, terms, and settlement.
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