Commodities traded on Exchanges:
A market that trades in primary and not manufactured products. They generally offer;
- Agricultural products such as wheat, coffee, cocoa and sugar.
- Metal commodities like Alluminium, coper etc.
- Bullions namely Gold and Silver
- Oil and Oil Seeds
Commodity-based money and commodity markets in a crude early form are believed to have originated in Sumer between 4500 BC and 4000 BC. Sumerians first used clay tokens sealed in a clay vessel, then clay writing tablets to represent the amount—for example, the number of goats, to be delivered. These promises of time and date of delivery resemble futures contract.
Gold and silver markets evolved in classical civilizations. At first the precious metals for valued for their beauty and intrinsic worth and were associated with royalty. In time, they were used for trading and were exchanged for other goods and commodities, or for payments of labor. Gold, measured out, then became money. Gold’s scarcity, unique density and the way it could be easily melted, shaped, and measured made it a natural trading asset
In 1864, in the United States, wheat, corn, cattle, and pigs were widely traded using standard instruments on the Chicago Board of Trade (CBOT), the world’s oldest futures and options exchange.
Commodities Exchanges in India:
In India, two leading exchanges are; Multi commodity Exchnage of India (commonly known as MCX) and National Commodity and Derivatives Exchnage Ltd. (commonly known as NCDEX)
Part 2 of this learning lesson will have more about these 2 exchnages…