Commodity: It is a tangible product that brought, sold or trade based on the value of the product at different markets. These are the raw materials that are used to create a product to consume daily from the food products to all other commodities
Commodities are the raw materials used to make products. Products are finished goods.
Hard commodities: All Natural resources like crude oil, gold and silver
soft commodities: Agricultural commodities like paddy, wheat, maize etc….
To develop the country in the economic perspective the commodities are very useful.
commodity can be traded in spot market and derivative market
| spot market | Derivative market |
| Physical commodity are sold or bought at a price negotiation between the buyer and the seller. | It is a future contract. in this the pre determined and standardised contract to buy and sell the commodities for a particular price in the certain date in future. |
By going to derivate market the price risk and profit can be made by using the hedgers and speculators or gamblers.
For commodities the price volatility is main issue because of the demand and supply variations in the market. Also the irregular harvest and production are also lead to price volatility and make the economic crisis and inflations. To reduce this the derivative markets are used by reducing the price risk.
FARM-EX 