Growth of Commodity Market

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. 

Indian Commodity Market in FY2023

As per the MCX commodity report, The fiscal year 2022-23 concluded positively for commodities exchange, showing increased strength in its key areas. Notably, trading volumes on the Exchange have been consistently rising, with Options witnessing particularly significant growth. On March 15, 2023, the MCX achieved its highest-ever turnover of Rs. 1.68 lakh crore, including a record-breaking Options turnover of Rs. 1.37 lakh crore. Noteworthy records were set in Crude Oil Options, reaching almost Rs. 1.25 lakh crore on March 15, and Gold Options (both 1 kg and 100 grams combined) surpassing Rs. 17,436 crores on March 24. Additionally, MCX and MCX Clearing Corporation Ltd. successfully managed the surge, handling a record-breaking 223.96 million transactions on March 20, 2023.At NCDEX, for FY2023, volume was Rs.49,151.49 lakhs and the average daily turnover was Rs.49,151 .49 lakhs.

The cumulative futures turnover on MCX for March 2023 amounted to Rs. 4,84,340 crores, representing an increase from the February 2023 turnover of Rs. 4,13,579 crores.

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

Gold, Silver, copper, lead, aluminium, zinc, natural gas and crude oil were outstanding commodities. 

Regulatory Developments

• Framework for adoption of cloud services by SEBI regulated entities.

• Common and simplified norms for processing investor’s service requests by RTAs and norms for furnishing PAN, KYC details and Nomination

• Launch of Natural Gas Mini Futures Contracts.

• Commodity exchange allows Participation of Foreign Portfolio Investors

• Penalty Structure for Non-display of Brokerage, Statutory & Regulatory Levies

Market Developments

• India's LNG imports Up 11% in February. 

• Indian cotton arrivals rise to 3-year high in March. 

• CRISP: Rubber Board launches comprehensive rubber information system. 

• Edible oil imports up 27% in first four months of current oil year. 

• Lure of gold drives SGBs past the 100-tonne mark for first time. 

• India to auction newly found lithium reserve. 

• Russia remains top supplier of crude oil to India for fifth straight month. 

• India's agricultural exports boom in FY23, up by more than 6%. 

• India’s Feb palm oil imports fall to 8-month low, say dealers. 

• India’s crude oil imports increased by 8% in February, reaching a two-decade peak.

Frequently Asked Questions

What is commodity in economics?

In economics, a commodity is a standardized, interchangeable good that is widely traded and has uniform quality across producers. These goods include raw materials like metals, agricultural products, and energy resources. Commodities are essential in supply and demand dynamics, influencing market prices. They serve as a foundation for the commodity futures market in India, enabling hedging and speculation. The commodity market is a key component of the global economy, facilitating trade and risk management.

What is commodity market time in India?

The commodity market in India operates from Monday to Friday. The trading hours are divided into two sessions: the morning session from 10:00 AM to 5:00 PM and the evening session from 5:00 PM to 11:30 PM (IST). These timings apply to both the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX).

Where to find market reports in the commodity market in India today?

Enrich Money's Resources page provides traders with daily updates and commodity report on the today commodity market, covering a variety of commodity products.

How to invest in the commodity market in India?

To invest in the commodity market in India, open a trading account with a registered commodity broker. Conduct thorough research on market trends and commodities. Execute trades through the commodity exchanges like MCX or NCDEX, using appropriate investment strategies.

How to trade commodity markets in India?

To trade in the commodity market in India, open a trading account with a recognized commodity broker. Research market trends, use technical and fundamental analysis, and develop a trading strategy. Execute trades on commodity exchanges like MCX or NCDEX by placing buy or sell orders through your trading account.