Commodity Market and Commodities Exchange

This post was updated on October 6th, 2018

Chicago Mercantile Exchange (CME Group)

 
 

What is a Commodity Market?

Commodity markets deal in soft commodities and hard commodities. Soft commodities are basically renewable and include cocoa, coffee, sugar, rice, soybeans, cotton and lumber. Hard commodities are generally fossil fuels, metals and other such products.

What is Commodity exchange?

A commodity exchange is an exchange where various commoditie derivative products, agricultural products and other raw material are traded.

A commodities exchange is an exchange where various commodities and derivatives products are traded.

Most commodity markets across the world trade in agricultural products and other raw materials and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures.

Commodity exchanges deal in standard contracts.

Commodities comprise of standardized products which have been graded according to quality.

These products are valuable commodities produced in large quantities according to the demand that is created in a market.

The exchange is represented by a central authority where trading takes place.

There is a physical location for this exchange and is an incorporated entity and acts as a non-profit organization that is in place to enforce rules, regulations and procedures.

 

Commodities and Futures

The terms “commodities” and “futures” are often used to describe commodity trading or futures trading.

A commodity futures contract is an agreement to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future.

Buyers use such contracts to avoid the risks associated with the price fluctuations.

Sellers use futures contracts to lock in guaranteed prices for their products.

Speculators and investors also buy and sell the futures contracts in attempt to make a profit and provide liquidity to the system.

 

What are the types of commodity exchange?

Precious Metals like Gold, Silver, Platinum and Copper

Energy like crude oil, heating oil, natural gas and gasoline

Livestock and Meat

Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar)

Commodities exchanges across the world

Most commodity exchanges are located in Japan, Chicago, New York and several European locations.

Commodity markets are located all over the globe.

You can see futures contracts taking place in commodity markets where two parties agree to exchange the commodity in the future on a specific date at a pre-set price. This means that the price fluctuations in the market do not have an effect on this type of contract and the agreement will be concluded on the delivery date.
The producer of the commodity can lock in the price and be assured of that amount of return on the delivery date ensuring that his trade is stable.

Speculating in the commodity markets by third parties have gained in popularity. Investors buy and sell futures contracts in financial markets and this can be a profitable way of diversifying a portfolio. Commodity markets are not as popular as the stock market or the Forex market although some investors have started trading in commodity contracts.

Best known commodity exchanges in the United States

The Chicago Mercantile Exchange (CME) Group

The Chicago Mercantile Exchange (often called “the Chicago Merc“, or “the Merc“) is an American financial and commodity derivative exchange based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an agricultural commodities exchange. Originally, the exchange was a non-profit organization.

The New York Mercantile Exchange (NYMEX)

(NYMEX) which is a part of the CME Group. CME Group is the world’s leading and most diverse derivatives marketplace, handling 3 billion contracts worth approximately $1 quadrillion annually.

Commodities exchanges across the world

Americas

Exchange Abbreviation Location Product Types
Brazilian Mercantile and Futures Exchange BMF São Paulo, Brazil Agricultural, Biofuels, Precious Metals
Chicago Board of Trade (CME Group) CBOT Chicago, United States Grains, Ethanol, Treasuries, equity index, Metals
Chicago Mercantile Exchange (CME Group) CME Chicago, United States Meats, Currencies, Eurodollars, equity index
Chicago Climate Exchange CCX Chicago, United States Emissions
Flett Exchange Jersey City, United States Environmental
HedgeStreet Exchange California, United States Energy, industrial Metals
HoustonStreet Exchange New Hampshire, United States Crude Oil, Distillates
Intercontinental Exchange ICE Atlanta, United States Energy, Emissions, Agricultural, Biofuels
Kansas City Board of Trade KCBT Kansas City, United States Agricultural
Memphis Cotton Exchange Memphis, United States Agricultural
Mercado a Término de Buenos Aires MATba Buenos Aires, Argentina Agricultural
Mercado a Término de Rosario ROFEX Rosario, Argentina Financial, Agricultural
Minneapolis Grain Exchange MGEX Minneapolis, United States Agricultural
Nadex Exchange Chicago, United States Energy, industrial Metals
Nodal Exchange Virginia, United States Energy
New York Mercantile Exchange (CME Group) NYMEX New York, United States Energy, Precious Metals, Industrial Metals
U.S. Futures Exchange USFE Chicago, United States Energy
Winnipeg Commodity Exchange ICE Winnipeg, Canada Agricultural

Africa

Exchange Abbreviation Location Product Types
Africa Mercantile Exchange AfMX Nairobi, Kenya Agricultural, Energy
Egyptian Commodities Exchange EGYCOMEX Cairo, Egypt Agricultural, Energy
Nairobi Coffee Exchange NCE Nairobi, Kenya Coffee
Ethiopia Commodity Exchange ECX Addis Ababa, Ethiopia Agricultural
Mercantile Exchange of Madagascar MEX Antananarivo, Madagascar Agricultural, Metals, Energy
East Africa Exchange EAX Kigali, Rwanda Agricultural
Agricultural Commodity Exchange for Africa ACE Lilongwe, Malawi Agricultural
Auction Holding Commodity Exchange AHCX Lilongwe, Malawi Agricultural
Bourse Africa Ebene City, Mauritius Metals, Forex
South African Futures Exchange (part of JSE Limited) JSE Sandton, South Africa Agricultural
Abuja Securities and Commodity Exchange ASCE Abuja, Nigeria Agricultural products

Europe

Exchange Abbreviation Location Product Types Life Time
APX-ENDEX APX-ENDEX Amsterdam, Netherlands Energy
Trieste Commodity Exchange BMTS Trieste, Italy Agricultural
Commodity Exchange Bratislava, JSC CEB Bratislava, Slovakia Emissions, Agricultural, Diamonds
Climex CLIMEX Amsterdam, Netherlands Emissions
Deutsche Börse/Eurex DBAG/EUREX Frankfurt, Germany Agricultural, Metals, ETCs, Commodities Index
European Climate Exchange ECX London, UK Emissions founded in 2005, acquired by ICE in 2010 and merged into ICE Futures Europe
European Energy Exchange EEX Leipzig, Germany Power, Natural Gas, Emissions, Coal
Energy Exchange Austria EXAA Vienna, Austria Energy, Emissions
Commodities Investment Exchange COINVEX London, England Oil & Gas, Mining, Renewable Energy
Integrated Nano-Science & Commodity Exchange INSCX United Kingdom Nanomaterials
London Commodity Exchange LCE London, UK Agricultural Merged into LIFFE in 1996
Nasdaq Commodities Oslo, Norway Power, Natural Gas, Emissions, Freight, Iron Ore
Nord Pool Spot Oslo, Norway Power, Energy
NYSE Liffe LIFFE Europe Agricultural Founded in 1982, merged into Euronext in 2002
London Metal Exchange LME London, UK Industrial Metals, Plastics (Delisted in 2011)
Power Exchange Centra Europe PXE Prague, Czech Republic Power
Belarusian Universal Commodity Exchange BUCE Minsk, Belarus Metals, Agricultural, Timber, Industrial and consumer goods
Saint-Petersburg International Mercantile Exchange SPIMEX Moscow, Russia Crude oil, Petrochemicals, Natural gas, Metals, Agricultural, Timber
Moscow Energy Exchange MOSENEX Moscow, Russia Energy Closed since March 2017

Asia

Exchange Abbreviation Location Product Types
Manila Commodity Exchange MCX Manila Philippines commodities, futures contracts and options contracts on various base metals, agriculture commodities, energy, and currencies
International Commodity Exchange Kazakhstan Almaty Kazakhstan Industrial and Mineral Products, Oil By-products and Petrochemicals, Agricultural
Agricultural Futures Exchange of Thailand AFET Bangkok Thailand Agricultural
Bangla Mercantile Exchange
Bursa Malaysia MDEX Malaysia Biofuels
Cambodian Mercantile Exchange CMEX Phnom Penh, Cambodia Energy, Industrial Metals, Rubber, Precious Metals, Agricultural
Central Japan Commodity Exchange Nagoya, Japan Energy, Industrial Metals, Rubber
Chittagong Tea Auction Chittagong, Bangladesh Tea
Dalian Commodity Exchange DCE Dalian, China Agricultural, Plastics, Energy
Dubai Mercantile Exchange DME Dubai Energy
Dubai Gold & Commodities Exchange DGCX Dubai Precious Metals
Hong Kong Mercantile Exchange HKMEx Hong Kong Gold, Silver
Indonesia Commodity and Derivatives Exchange ICDX Jakarta, Indonesia Agricultural Products, Base Metals, Financial Products
Iran Energy Exchange IRENEX Tehran, Iran All energy carriers such as crude oil, petroleum products, electricity, coal…
Iran Mercantile Exchange IME Tehran, Iran Industrial and Mineral Products, Oil By-products and Petrochemicals, Agricultural
Jakarta Futures Exchange JFX Jakarta, Indonesia Cocoa, Arabica and Robusta Coffee, Precious Metals, Olein, CPO, Coal, Tea, and Rubber
Kansai Commodities Exchange KANEX Osaka, Japan Agricultural
Commodities & Metal Exchange Nepal Ltd. COMEN Nepal Gold, Silver
National Spot Exchange Limited [NSEL] Mumbai, India
Nepal Derivative Exchange Limited [NDEX] Kathmandu, Nepal Agricultural, Precious Metals, Base Metals, Energy
Derivative and Commodity Exchange Nepal Ltd. DCX Kathmandu, Nepal Agricultural, Bullion, Base Metals, Energy
MEX Nepal MEX Kathmandu, Nepal Agricultural, Bullion, Base Metals, Energy
Nepal Spot Exchange Limited NSE Kathmandu, Nepal Agricultural, Bullion
Indian Commodity Exchange Limited ICEX India Energy, Precious Metals, Base Metals, Agricultural
Multi Commodity Exchange MCX India Precious Metals, Base Metals, Energy, Agricultural
National Commodity and Derivatives Exchange NCDEX India Precious Metals, Base Metals, Energy, Agricultural
National Multi-Commodity Exchange of India Ltd NMCE India Precious Metals, Base Metals, Agricultural
Chamber of Commerce, Hapur COC India Agricultural
Ace Derivatives & Commodity Exchange Ltd. ACE India Agricultural
Bhatinda Om & Oil Exchange Ltd. BOOE India Agricultural
Universal Commodity Exchange UCX India Agricultural, Energy, Precious Metals
Pakistan Mercantile Exchange PMEX Pakistan Precious Metals, Agricultural Products, Energy, Interest Rate Future, FX, Metals
Shanghai Futures Exchange Shanghai, China Industrial metals, Gold, Petrochemicals, Rubber, Base metals
Shanghai Gold Exchange Shanghai, China Precious Metals
Singapore Commodity Exchange SICOM Singapore Agricultural, Rubber
Singapore Mercantile Exchange SMX Singapore Precious Metals, Base Metals, Agricultural, Energy
Uzbek Commodity Exchange UZEX Tashkent, Uzbekistan Metals, crude oil products, chemicals, base oils, LPG and polyethylene, sugar, agricultural, etc.
Tokyo Commodity Exchange TOCOM Tokyo, Japan Energy, Precious Metals, Industrial Metals, Agricultural
Tokyo Grain Exchange TGE Tokyo, Japan Agricultural
Zhengzhou Commodity Exchange CZCE Zhengzhou, China Agricultural, PTA
Vietnam Commodity Exchange VNX Ho Chi Minh city, Vietnam Coffee, Rubber, Steel
Buon Ma Thuot Coffee Exchange Center BCEC Buon Ma Thuot, Vietnam Coffee
Mongolian Agricultural Commodity Exchange MCE Ulaanbaatar city, Mongolia Agricultural

 

By: A Dababneh

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