Multi Commodity Exchange of India (MCX) is one of the largest commodity exchanges in India. It provides a wide range of commodities for trading like metals, energy, and agricultural products for traders and investors. Multi Commodity Exchange of India (MCX) was established in 2003 grew day by day and became one of the major players in the Indian commodity market. Buyers and sellers can trade commodities on this platform. It is headquartered in Mumbai. It is the largest commodity derivatives exchange in India and the sixth largest in the world. Initially, it was a platform to trade gold and silver, but with time, it entered into a wide range of commodities. Today, we will talk about the top commodities traded on MCX. They are follow
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Gold
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Silver
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Crude Oil
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Natural Gas
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base Metals
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Agricultural Commodities
Top Commodities Traded on MCX:-
Let’s discuss in depth the Top Commodities Traded on MCX-
Gold:
Gold is a highly traded commodity on MCX, after all, it is the most valuable metal in the world. Gold is a safe-haven asset, especially in India. Gold prices even play an important role in hedging against inflation and economic uncertainties. Gold price is influenced by global economic conditions, currency fluctuations, geopolitical events, and central bank policies. Here is trading insight of gold-
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Contract Size: Gold contracts on MCX are available in various sizes, including 1 kg, 100 grams (Gold Mini), and 8 grams (Gold Guinea).
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Expiry Cycle: Monthly contracts with multiple expiry dates.
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Margin Requirements: Typically around 5-10% of the contract value.
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Trading Strategy: Investors and traders trade on gold because it is a long-term holding for wealth preservation and short-term trading based on economic data and market trends.
Silver:
Silver is the most traded on the MCX, after all, it was another popular precious metal after gold. It is highly used in industrial applications and investment demand. Silver price is influenced by industrial demand, particularly from the electronics and solar energy sectors. Here are the trading insights-
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Contract Size: Commonly traded in 30 kg (Silver) and 5 kg (Silver Mini) contracts.
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Expiry Cycle: Monthly contracts.
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Margin Requirements: Typically around 5-10% of the contract value.
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Trading Strategy: Silver adds diversification to the trader’s portfolio.
Crude Oil:
Crude Oil is one of the most actively traded commodities globally. Hence, it is in the third position on the MCX platform. It is vital for energy production and industrial applications. The price of crude oil is influenced by the global supply and demand dynamics, geopolitical tensions, and OPEC policies. Here are the trading insights-
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Contract Size: The standard contract size is 100 barrels (Crude Oil) and 10 barrels (Crude Oil Mini).
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Expiry Cycle: Monthly contracts.
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Margin Requirements: Around 5-10% of the contract value.
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Trading Strategy: Crude oil follows energy market trends.
Natural Gas:
Natural gas is a crucial energy source in India. It also holds significant trading volumes on MCX. It is also popular in the global exchange market. The price of natural gas is influenced by seasonal demand, production levels, and geopolitical factors. Here are the trading insights-
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Contract Size: Standard contract size is 1250 MMBtu (Natural Gas) and 250 MMBtu (Natural Gas Mini).
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Expiry Cycle: Monthly contracts.
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Margin Requirements: Typically around 5-10% of the contract value.
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Trading Strategy: Trading on natural gas is seasonal. Traders engage in it with weather forecasts and storage reports.
Base Metals:
Base metals like Copper, Aluminum, Zinc, Lead, Nickel, etc are widely traded on MCX. These base metals are highly used in the industrial field. Each metal has unique characteristics and applications. Each base metal holds its value and price. The price of any of these base metals is influenced by industrial demand, global economic growth, and supply disruptions from mining activities. Here are the trading insights-
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Contract Sizes and Expiry Cycles: Vary for each metal, with monthly contracts available.
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Margin Requirements: Typically around 5-10% of the contract value for each metal.
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Trading Strategy: Traders focus on the industrial production trends, and global economic indicators for trading on these.
Agricultural Commodities:
Agricultural Commodities like Cotton, Cardamom, and Crude Palm Oil are also popular on the MCX for trading. They are essential for the food and textile industries. The price of Agricultural Commodities is influenced by the weather conditions, crop yields, and global demand-supply balance. Here are the trading insights-
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Contract Sizes and Expiry Cycles: Vary for each commodity, with monthly and seasonal contracts available.
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Margin Requirements: Typically around 5-10% of the contract value.
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Trading Strategy: Traders focus on weather forecasts, crop reports, and global trade policies for trading on Cotton, Cardamom, Crude Palm Oil, etc Agricultural Commodities.
Conclusion:
The Multi Commodity Exchange of India is the most popular commodity platform in India, which provides a wide range of commodities for trading. Mainly, it is popular for the trading of precious metals like gold and silver to energy products like crude oil and natural gas, and industrial metals and agricultural products. Each commodity has its own unique market. Traders and investors trust MCX and trade for the most valuable commodity with it only.
FAQs:-
- What is MCX?
- MCX stands for Multi Commodity Exchange of India Ltd., a leading commodity derivatives exchange in India.
- What commodities can I trade on MCX?
- You can trade commodities such as gold, silver, crude oil, natural gas, base metals (copper, zinc, lead), and agricultural products (cotton, cardamom).
- Why is gold a popular commodity on MCX?
- Gold is a safe-haven asset used for wealth preservation and hedging against inflation and economic uncertainties.
- What are the contract sizes for gold and silver on MCX?
- Gold contracts are available in sizes of 1 kg, 100 grams (Gold Mini), and 8 grams (Gold Guinea). Silver contracts are typically 30 kg (Silver) and 5 kg (Silver Mini).
- How are crude oil and natural gas traded on MCX?
- Crude oil is traded in standard sizes of 100 barrels and 10 barrels (Crude Oil Mini), while natural gas is traded in sizes of 1250 MMBtu and 250 MMBtu (Natural Gas Mini).
- What factors influence the prices of base metals on MCX?
- Prices of base metals like copper, aluminum, and zinc are influenced by industrial demand, global economic growth, and supply disruptions from mining activities.
- What are the margin requirements for trading commodities on MCX?
- Margin requirements typically range from 5-10% of the contract value for most commodities traded on MCX.
- How do seasonal factors affect agricultural commodities trading on MCX?
- Agricultural commodity prices are influenced by weather conditions, crop yields, and global demand-supply balance. Seasonal contracts are available to account for these variations.
- Why is MCX considered a reliable platform for commodity trading?
- MCX is regulated by the Securities and Exchange Board of India (SEBI), ensuring fair trading practices, market integrity, and investor protection.
- What strategies do traders use for commodities trading on MCX?
- Traders use strategies based on market trends, economic indicators, weather forecasts, crop reports, and global trade policies to make informed trading decisions.