Commodities Exchange

Commodities Exchange. Information on Commodity Exchanges.

Commodities Exchange

To understand a commodities exchange, we need to first technically understand the term "commodity". What is it? In simple terms, commodity means goods that are bought and sold in the market by traders at current prices and also at previously fixed prices. Commodities exchange can be termed as an association, or a company, or any other body that organizes the trading of such goods.

Why were commodities exchanges set up?

Before they came in to existence, sellers and buyers used to come to a common market place for trading. Buyer could judge the amount of produce while the seller could judge the amount of demand of the commodity. Thus they could dictate their terms and hence the counter party was left with no choice. In order to hedge from this unfavorable price movement, need of the commodity exchange was felt.

Here are a few commodities exchanges across the world

USA

Chicago Board of Trade (CBOT): It is a trading centre for commodities and the largest futures exchange in the world where trading is carried out in commodities like maize, soya beans, crude soya bean oil, soya bean meal, oats, gold and silver.

Coffee, Sugar & Cocoa Exchange (CSCE): Based in New York, it is a major market in futures and options on coffee, sugar, cocoa, cheddar cheese and non-fat dry milk.

Mid America Commodity Exchange (MIDAM): This Chicago based exchange deals in meats and grains. MIDAM is affiliated to CBOT, and a number of its futures and options contracts are traded on the floor of the CBOT.

New York Cotton Exchange (NYCE): Founded in 1870, it is the oldest commodity exchange in New. It is also the world's prime market for cotton futures and options. NYCE also trades in liquefied propane gas futures.

Minneapolis Grain Exchange (MGE): Deals in futures contracts for spring wheat and white wheat and also in cash for barley, maize, drum wheat, flaxseed, oats, rye, soya beans, spring wheat and sunflower seeds. It offers the world's only seafood futures contracts (white and black Tiger shrimp).

UK

International Petroleum Exchange (IPE): A commodity market that deals in futures contracts (Brent and Dubai crude oil, gas oil, leaded and unleaded gasoline, naphtha and heavy fuel oil), as well as in options (Brent crude and gas oil).

London Metal Exchange (LME): LME is the market for trade in metals and the world futures and cash market for trades in non-ferrous metals, such as aluminum, aluminum alloy, copper, lead, nickel, tin and zinc. Official prices of the LME are used by producers and consumers worldwide for their long-term contracts.