Commodities Market
A commodity is any product having a commerce value i.e. an article of commerce that can be traded on an authorized commodity exchange NYBOT or NYMEX. This article should be a movable of value, which can be purchased or sold or used as the subject of barter or sale. For example agricultural products, oil gold, silver etc.
These commodities are traded on commodity exchanges throughout the world. The concept of such exchanges started way back in the middle of the 19th century in the United States. Then, few of the businessmen started organizing market forums to make commodities buying and selling easy. This provided a platform for buyers and sellers to meet. Here, the businessmen set quality and quantity standards of commodities and rules of business were also established.
Taking snippets from history, a group of Manhattan dairy merchants brought a chaotic New York market into a system in terms of storage, pricing and transfer way back in 1872. During the Great Depression in the year 1933, Commodity Exchange, Inc. was established in New York with the merger of National Metal Exchange, Rubber Exchange of New York, National Raw Silk Exchange and New York Hide Exchange. Today, speaking globally, major Commodities markets are in US and UK.
The Commodities Market is also known as Derivatives Market or Futures. There are three players in the market namely Hedgers, Speculators and Arbitrators. Hedgers are investors/companies? who protects themselves from the risk related to price. Speculators are middlemen and they never actually own the commodity. Arbitrators are people chosen officially to make a decision between two people or two parties.
The Commodities market is run by Future Contracts, is an agreement between two parties for a particular commodity to be traded in a particular time in the future for a pre-defined price. The advantages of future contracts are that the price moves are favorable and no premium charges are associated.
Few of the world’s leading Commodity Exchanges are as given below:
| Exchange | Abbreviation | Location | Product Types |
|---|---|---|---|
| CME Group | CME | Chicago, US | Agricultural, Biofuels, Precious Metals |
| New York Board of Trade | NYBOT | New York, US | Agricultural, Biofuels |
| New York Mercantile Exchange | NYMEX | New York, US | Energy, Agricultural, Industrial Metals, Precious Metals |
| Dalian Commodity Exchange | DCE | Dalian, China | Agricultural, Plastics |
| NYSE Euronext | Europe | Agricultural | |
| London Metal Exchange | LME | London, UK | Industrial Metals, Plastics |
| Central Japan Commodity Exchange | Nagoya, Japan | Energy, Industrial Metals, Rubber | |
| Dubai Mercantile Exchange | DME | Dubai | Energy |
