Growth of Commodity Market

growth of commodity

The essential factor of the financial markets of any country is its commodity market

Metals, base metals, crude oil, energy, and soft commodities like palm oil, coffee, etc., are traded. 

It is necessary to create an active and energetic market. This would help investors cover their commodity risk, take speculations, and profit from unequal prices. 

The agricultural sector grants maximum growth towards GDP in India. India has more possibility to become an important centre for trading more commodities

However, the government's intervention in the agricultural market is to maintain buffer stock, fix the prices, and impose restrictions on the Export and import of commodities.

There is a desperate need for India's developed commodity derivative market to safeguard the farmers by fixing fair prices and maintaining buffer stocks. 

The present study analyses the growth and challenges of the commodity market in India.

With the help of modern technology, The National Exchanges have enabled the facility of commodity futures trading across the country. 

The Total Trade Value Of Trade:

2011 – 12: 181.26 lakh crore

2010 – 11: 119.49 lakh crore

2009 – 10: 77.65 lakh crore

 The significant commodities traded at the exchanges were Bullion, base metals, energy products, and agricultural commodities. 

Gold, Silver, copper, lead, nickel, zinc, chana, soy oil, guar seed, and crude oil were outstanding commodities. 

Various awareness and capacity-building programs and implementation of the Price Dissemination Project at APMCMandis were held by the Forward Commission amongst stakeholders. The focus was on the regulation of futures trading in commodities

The Focus Of The Commission In The Upcoming Years:

1. Consolidate the market

2. Strengthen the regulation

3. Generate confidence amongst the participants

4. Keep the market free from manipulation

5. Increase awareness among the stakeholders

6. Empower the farmers with price information

7. Encourage and facilitate intermediaries such as aggregators to facilitate the participation of farmers in the market for hedging.

The below exchanges contributed 99.84% of the total value among twenty-one recognized businesses. 

Multi Commodity Exchange (MCX), Mumbai, National Commodity and Derivatives Exchange (NCDEX), Mumbai, National Multi Commodities Exchange (NMCE), Ahmedabad, Indian Commodity Exchange, Ltd., Gurgaon, ACE Derivatives and Commodity Exchange, Ahmedabad, National Board of Trade (NBOT), Indore.

Although the futures trading in a few agricultural commodities was suspended, the Indian Commodity Futures Markets continued to grow. 

One hundred thirteen commodities were regulated under the auspices of the recognized Exchanges during this period. 

Twenty-one recognized exchanges were functioning during 2011-12. 

The outstanding traded commodities among 113 regulated by FMC were Silver, Gold, Copper, Nickel, Zinc, Lead, Soy Oil, Guarseed, Chana, Pepper, and Jeera. 


Name of the Exchanges Value of the Recognised Exchanges
2009-10 in Cr. 2010-11 in Cr. 2011-12 in Cr.
MCX 63,93,302.17(82.34) 98,41,502.90(82.36) 155,97,095.47(86.05)
NCDEX, Mumbai 9,17,584.71(11.82) 14,10,602.21(11.81) 18,10,210.1(9.99)/td>
NMCE, Ahmedabad 2,27,901.48(2.94) 2,18,410.90(1.83) 2,68,350.95(1.48)
ICEX, Gorgons 1,36,425.36(1.78) 3,77,729.88(3.16) 2,58,105.67(1.47)
ACE, Ahmedabad @ - 30,059.63(0.25) 1,38,657.61(0.76)
NBOT, Indore 60,449.52(0.78) 51,662.06(0.43) NA
Total Exchanges 77,35,663.24(99.64) 1,19,29,967.58(99.84) 1,80,72,419.8(99.70)
Others 29,090.81(0.36) 18,974.77(0.84) 53687.0(0.30)
Grand Total 7,76,475.050100 1,19,48,942.35100 1,81,26,106.80 (100)

The share of various exchanges in the total trade value from 2009-to 2012 is depicted. 

There was an increase from Rs. 7,76,475.05 crores to Rs.1,81,12,6106.8 crores in the total value of trade in commodity exchanges. 

The MCX commodity exchange-traded 82.34 percent of the value and increased its share to 86.34 percent by 2011-12.

It was noted that there was a decrease in the NMCE's share value of actual commodities traded from 2.94 percent to1.48 percent from 2009 to 2012.

There was a decrease in the NCDEX commodity exchange share value of trade from 11.82 to 9.99 percent from 20011-to to 2012. 

The MCX is the major contributor to the commodity market in trade volume and value. 

Tables 4 & 5 Depict:

 From 2009-to 2012, the trade has increased over the years in absolute terms. 

The share in total value decreased in some of the metals like Lead and Nickel. 

The growth is not an inconsiderable amount, although commodities like Silver, Gold, Crude oil, Copper, and other commodities increased. 

By 2011-12, the value of commodities traded in the MCX commodity market increased from 17.86 crores to 36.79crores.

By 2010-11, the value of Gold to total value decreased from 30.07 crores to 25.09 and then increased to 27.09 crores. 

The value of Crude oil decreased continuously.

From 2009-10 to 2011-12, the percentage share of Silver in the total value of commodities traded in the MCX market increased from 17.86 per cent to 36.79 per cent. 

From 2009-10 to 2010-11, the per cent value of Gold to the total value of commodities traded to total commodity decreased from 30.07 to 25.09 per cent and increased to 27.09 by 2011-12. 

From the years 2009-1- to 2011-12, the per cent value of Crude Oil decreased from19.07 per cent to 15.79 per cent. 

From the year 2010-to 11, Lead was introduced as a commodity. 

Zinc was not traded during the year 2011-12 in MCX Market.



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