Some of the major economic data are:

• Employment data
• GDP data
• Non-Farm payroll data
• PPI (Production Price Index)
• FOMC meeting (Federal Open Market Committee)
• Crude Oil inventory
• Natural Gas inventory
• LME inventory (London Metal Exchange)

Commodity Options are useful risk-management tools, particularly for small stakeholders, as the Option buyer does not generally have to maintain margins. They are akin to price insurance for hedgers, which can be bought by paying only a one-time option premium.

An option is a derivative contract that gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying. For owning this right, the option holder pays a price (called option premium) to the seller of this right. The seller (writer) of option, on the other hand, bears the obligation to honour the contract should the buyer choose to exercise the option.

MCX offers options on commodity futures contracts traded on the exchange. These commodity options, on exercise, devolve into the underlying futures contracts. All such devolved futures positions open at the strike price of exercised options.

• USDINR fluctuation (Forex market fluctuations and Currency market fluctuations)
• Supply and Demand factors
• Economic indicators and factors
• Storage levels and transportation constraints
• Geopolitical factors
• Seasonal factors – extreme weather changes affect commodity prices

The Securities and Exchange Board of India (SEBI) regulates the commodity derivatives market in India since September 28, 2015. Before September 28, 2015, the Commodity derivatives market was regulated by erstwhile Forward Markets Commission (FMC).

India has 6 major Commodity trading exchanges, namely:

• National Multi Commodity Exchange India (NMCE)
• National Commodity and Derivative Exchange (NCDEX)
• Multi Commodity Exchange of India (MCX)
• Indian Commodity Exchange (ICEX)
• National Stock Exchange (NSE)
• Bombay Stock Exchange (BSE)

Bullion
Gold, Gold Mini, Gold Guinea, Gold Petal, Silver, Silver Mini, Silver Micro

Base Metals
Aluminium, Copper, Lead, Nickel, Zinc

Energy
Crude Oil, Natural Gas

Agriculture
Crude Palm Oil (CPO), Kapas, Mentha Oil, Rubber

The following table illustrates the lot size, price quotation unit and, interestingly, the profit/loss you will make on your trade if your contract value moves by a single Rupee:

The best five buy and sell orders for every contract available for trading are visible to the market and orders are matched based on price time priority logic. Orders can be placed with time conditions and/or price conditions.

Day Order
A Day Order is valid for the day on which it is entered. If the order is not matched during the day, the order gets cancelled automatically at the end of the trading day.

GTC
A Good Till Cancelled (GTC) order is an order that remains in the system until the expiry of the respective contract in which it is entered or until when the same is cancelled by the member.

GTD
A Good Till Date (GTD) order is valid till the date specified by the member. After the specified date, the unexecuted orders get automatically cancelled by the system.

IOC
An Immediate or Cancel (IOC) order allows a member to execute the orders as soon as the same is placed in the market, failing which the order will get cancelled immediately.

Limit Order
The order wherein the price is to be specified while placing the same.

Market Order
The order at the best available price at the time of placing the same.

The below segments of people generally invest and trade in the Commodities markets in India:

• Farmers
• Exporters
• Importers
• Hedgers
• Traders
• Jobbers
• Arbitragers

Traders, Jobbers and Arbitrager generally provide liquidity in the Commodity market.

CME Group Inc. (Chicago Mercantile Exchange) is an American global markets company. It is the world's largest financial derivatives exchange, and trades in asset classes that include agricultural products, currencies, energy, interest rates, metals, stock indexes and cryptocurrencies futures.

NYMEX (New York Mercantile Exchange) is a commodity futures exchange owned and operated by CME Group of Chicago.

The Chicago Board of Trade (CBOT), established on April 3, 1848, is one of the world's oldest futures and options exchanges. On July 12, 2007, the CBOT merged with the Chicago Mercantile Exchange (CME) to form CME Group. CBOT and three other exchanges (CME, NYMEX, and COMEX) now operate as designated contract markets (DCM) of the CME Group.

The London Metal Exchange (LME) is a futures and forwards exchange with the world's largest market in standarised forward contracts, futures contracts and options on base metals. The exchange also offers contracts on ferrous metals and precious metals. The company also allows for cash trading. It offers hedging, worldwide reference pricing and the option of physical delivery to settle contracts.

The Shanghai Metal Exchange (SHME) was established on 28 May, 1992. SHME is a non-profit, self-regulating corporation. The exchange was created for trading in non-ferrous metals and currently contracts for several non-ferrous metals, including copper, aluminium, lead, zinc, tin, nickel. SHME is located in the city of Shanghai and its geographical location bridges the time gap between London Metal Exchange and New York Mercantile Exchange markets, thus enabling traders across the world to have a 24-hour access to futures contracts of non-ferrous metals.

Currently, there are 3 Index Futures available in MCX

• MCX iCOMDEX Bullion: MCX iCOMDEX Bullion Index (Symbol: MCXBULLDEX) is part of MCX iCOMDEX family of Excess Return (ER) indices, whose constituents are near month futures contracts of Gold and Silver traded on MCX. Being ER index, it also provides the return attributed to rolling of constituent contracts to a new expiry, apart from price returns. It has a base value of 10,000 as on December 31, 2015.
  Trading Unit (1 Lot) Rs 50 * MCX iCOMDEX Bullion Index.
  Settlement Mechanism: The contract would be settled in cash.
• MCX iCOMDEX Base Metal Index (Symbol: MCXMETLDEX) is part of MCX iCOMDEX family of Excess Return (ER) indices, whose constituents are near month futures contracts of Aluminium, Copper, Lead, Nickel and Zinc, traded on MCX. Being ER index, it also provides the return attributed to rolling of constituent contracts to a new expiry, apart from price returns. It has a base value of 10,000 as on December 31, 2015.
  Trading Unit (1 Lot) Rs 50 * MCX iCOMDEX Base Metal Index.
  Settlement Mechanism: The contract would be settled in cash.
• MCX iCOMDEX Energy Index (Symbol: MCXENRGDEX) is part of MCX iCOMDEX family of Excess Return (ER) indices, whose constituents are near month futures contracts of Crude Oil and Natural Gas traded on MCX. Being ER index, it also provides the return attributed to rolling of constituent contracts to a new expiry, apart from price returns. It has a base value of 10,000 as on December 31, 2015.
  Trading Unit (1 Lot) Rs 125 * iCOMDEX Energy Index.
  Settlement Mechanism: The contract would be settled in cash.

Note that all 3 Indexes are rebalanced in the month of January every year. The detailed methodology and data are available on the MCX website.

Commodities are a different asset class from stocks and bonds in the investment world. Trade in commodities takes place on certain exchanges. The commodity market operates for longer hours and differs from the equity market.to see the list of trading and clearing holidays.

The market for Commodity Derivatives is open every week from Monday to Friday. The trading window is extended due to different time zones and to coincide with the opening of the global commodity market. Typically, the Commodity trading timings are 9 am to 11:55 pm.

If you are aware of the factors that influence commodity prices, commodities trading can be profitable for you. Don’t expect overnight positive returns, though. Having a trading strategy that works for you is crucial. Copying other traders’ strategy is rarely successful.

Although there is an extensive list of commodities traded in our country, here are the ones that are frequently traded:

• Crude Oil
• Natural Gas
• Gold
• Silver
• Copper
• Zinc
• Aluminum

Trading in commodities entails purchasing and selling commodities in response to price fluctuations. Let’s see how you can start trading in commodities. The first step is to understand the fundamentals of the Commodity trading market before you start investing. Then select an efficient broker, which will carry out all the trading on your behalf. We suggest you choose a full-service broker like Sharekhan. We offer Research-based trading suggestions for the Commodity segment, so if you are a novice trader you can make well-informed choices. After this, make sure you have a trading strategy in place. Then comes the initial deposit. Typically, 10% of the contract value is more than enough to begin trading in commodities.

In India, you can trade in Commodity Futures and Options in the market. To get started, you need to have a Commodity trading account. Click here to see the simple 3-step segment activation process on Sharekhan platforms. There are several commodity exchanges in the country that mediate Commodity trading.