You can invest in commodities by investing in the stocks of the companies whose business depends on the commodities prices. You can buy exchange-traded funds, index funds and mutual funds of the companies that focus on commodities.
The commodity market trades in the economic sector. The commodity exchange is the place where you can trade in commodities and related products. It is a physical place where the trading actually takes place. It consists of buyers and sellers. The commodity market live rate is the price of the commodity when currently traded at the exchange. It is the current price at which the commodity can be bought or sold.
If you trade online then you can get the live rates online to help you trade. There are many websites offering live quotes. You also get commodity price charts, research tools with insights into the local and the global commodity trade movement.
Trading in commodity
The commodity trading follows a economic principle of supply and demand. If the supply is lower than the demand the prices go higher. If the supply is in surplus then the prices will be lowered to clear the market. This leads to reduced prices and increase in the sales of the commodity.
The commodity derivative is the new investment gateway. Farmers use commodity derivative to trade. The commodity derivative are futures contract, forward contract, swaps, options and warrants. The most common is the future contract. A future contract is a pure play on the underlying commodity. A futures contract is a contract between the two parties to buy or sell a commodity at a future date and price. The contract is highly standardised to be traded at an exchange. The contact can be settled physically or in cash.
The commodity exchanges in India
India has six national commodity exchanges besides the regional ones. The national commodity exchanges are as follows :
Multi commodity exchange (MCX)
Indian commodity exchange limited (ICEX)
National commodity and derivatives exchange limited (NCDEX)
National Multi-commodity exchange of India (NMCE)
Ace derivatives and commodity exchange (ACE)
Universal commodity exchange (UCX)
The commodity exchange enforces rules and regulation in trading. The commodity traded at the exchange has to meet the minimum quality standard. The quality is uniform among producers. The particular commodity is the same regardless of the producer. Thus it offers a good marketplace and opportunities for trading. The objective of the commodity exchange is to offer an effective and competitive market for trading.