A Commodity market is a physical or virtual market-place for buying, selling and trading raw or primary products and there are currently about 50 major commodity markets worldwide that facilitate investment trade in approximately 100 primary commodities.
There are numerous ways to invest in commodities. An investor can purchase stock in corporations whose business relies on commodity prices or purchase mutual funds, index funds, or exchange-traded funds (ETF) that have focused on Commodities related companies. The most direct way of investing in commodities is by buying into a futures contract. A futures contract obligates the holder to buy or sell a commodity at a predetermined price on a delivery date in the future.
TYPES OF COMMODITIES
01. Hard Commodities
The hard commodities are the commodities which are mined or extracted. The examples of hard commodities are Gold, precious metals, rubber, oil, etc.
02. Soft Commodities
The soft commodities are the commodities which are usually agricultural products and livestock products. The examples of soft commodities are corn, wheat, coffee, sugar, pork, soybeans, etc.
COMMODITY EXCHANGES IN INDIA
- Multi Commodity Exchange (MCX)
- National Commodity and Derivatives Exchange (NCDEX)
- Universal Commodity Exchange (UCX)
- National Multi Commodity Exchange (NMCE)
- Indian Commodity Exchange (ICX), etc.