Commodities are goods that people use on a daily basis, including food, metals, oils, and other essential items. These goods are traded on markets and have a dynamic nature, meaning their prices fluctuate based on various factors. In simple terms, commodity markets are platforms where people can buy, sell, or exchange these goods. Commodity trading in India dates back to 1875.
Over the years, commodity trading in India has faced challenges due to factors such as foreign invasions, government regulations, and natural disasters, which led to periods of decline. However, compared to other sectors of the stock market, commodity trading has performed relatively well and continues to gain popularity. Since 2015, the Securities and Exchange Board of India (SEBI) has been overseeing the regulation of the commodity market. Today, a wide range of commodities are actively traded. In this article, we will explore some of the best commodities to trade in India.
1. Cereals: This category includes products that come from farms, such as wheat, corn, and soybeans. It also covers livestock products like cows and milk, as well as crops like coffee beans, cocoa beans, sugar cane, cotton, and rubber.
2. Energy: These commodities are related to the production and consumption of energy, including sources like oil, natural gas, and coal. Energy commodities are crucial for industries, transportation, and households, playing a key role in powering economies.
3. Base Metals and Precious Metals: Metals make up the majority of this category. Base metals, like copper and aluminum, are widely used in manufacturing, while precious metals like gold, silver, and platinum are prized for their rarity, beauty, and uses in jewelry, investment, and industry. Their value is often influenced by market conditions.
4. Soft Commodities (Agricultural Products): These include crops like coffee, cocoa, sugar, cotton, and rubber. Prices for soft commodities can fluctuate frequently due to factors like weather, supply and demand dynamics, and geopolitical events.
Here are some of the most traded commodities to trade in India:
1. Crude Oil
Crude oil is one of the most heavily traded commodities globally. After a sharp decline in prices in 2020 due to the COVID-19 pandemic and global lockdowns, crude oil prices began to rise in 2021 as vaccination rates increased and economies reopened, boosting demand.
2. Gold
Gold is another highly traded commodity, known for its ability to hedge against inflation and economic uncertainty. Its price is influenced by factors such as supply and demand, movements in the US dollar, global political instability, and central bank policies. Gold and crude oil often have an inverse relationship — when crude oil prices fall, gold prices tend to rise.
3. Copper
Copper is a major industrial metal and is often used as a barometer for economic activity in industrialized nations. Its demand is tied to global growth, especially in manufacturing and construction. Over the past year, copper prices have surged by nearly 80%.
The Indian Multi Commodity Exchange (MCX) hosts a variety of commodities that are actively traded. The most popular ones in the current financial year include:
Natural Gas
Silver
Gold
Copper
Zinc
Gold Petal
Aluminium
Crude Oil
Lead
Cotton
Mentha Oil
MCXBULLDEX
Online commodity trading has become a popular avenue for investors in India. The prices of commodities are influenced by numerous factors, including supply and demand, global trends, and economic data. The growth of online trading continues to open up opportunities in India’s dynamic commodity markets.
When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
