What are the Top Commodities Traded in India

India has made considerable and quick advancements in online commodity trading over the years. Currently, both hard and soft commodities are traded in India. The top commodities, which have a short shelf life, include agricultural products like wheat, soybeans, cotton, and corn, as well as metals, crude oil, and precious metals.

On MCX alone, you may trade the futures and options of more than 20 different commodities. These goods are divided into groups like agricultural goods, base metals, precious metals, and energy. When it comes to online commodities trading, even more top trading commodities are available on other platforms. You may better organise your approach if you are aware of the list of commodities traded in India on exchanges like MCX and NCDEX and also the most traded commodities. 

Types of Commodities in India

In India, commodities are divided broadly into two categories, namely, Soft Commodities and Hard Commodities. 

1. Soft Commodity: Soft commodities are mostly agricultural products including seeds, wheat, fruits, and vegetables.
2. Hard Commodity: Hard commodities include products used in industry, such as metals, crude oil, and petrol. 

These two commodities are traded on several commodity markets. The National Commodity and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange of India (MCX) are two of the most well-known commodity marketplaces in India. You'll note that the commodities exchanges in India have an odd quality. The kinds of commodities on MCX and NCDEX slightly overlap in several areas. However, both platforms also provide several individual goods. 

As a result, understanding the list of commodities traded in India by exchange can help you use futures and options contracts successfully.

Top Commodities Traded in India

Now, let’s find out what are the top commodities traded in India. India is a varied nation that produces top commodities and trades a variety of goods. Some of the best commodities to trade in the list of Indian commodity marketplaces are listed below.

1. Farming Products

• Cotton: Cotton is the most important textile fibre and natural fibre used to make clothing, and India is one of the countries that produces the most of it. Hence, it is also one of the highest traded commodities.
• Soybean: Even though soybeans are one of the most popular commodities, variables like the weather, need for foreign exchange currency like the dollar, and biodiesel have an impact on trading. 
• Wheat: In 2022, the export value of wheat, a basic commodity in India, was 2121 million. The whole Indian agri-commodity market, as well as wheat production and export, are significantly impacted by weather and natural disasters.

2. Currency

• Gold: Due to its rarity, gold is one of the most expensive metals. Due to the fact that it keeps its purchasing value even during times of inflation, the majority of people utilise it as a financial asset.
• Silver: Due to its wide range of applications, silver is in great demand and one of the most traded commodities in India. These three sectors—industry, investment, and jewellery (decor)—are the main sources of demand for silver in the commodities trading market. 95 per cent of the yearly demand for silver comes from these 3 industries.  

3. Energy 

• Crude Oil: Due to its reliance on it for a substantial portion of its energy demands, India is one of the biggest importers of crude oil. The benchmark crude oils for the pricing of the commodity are West Texas Intermediate and Brent Crude Oil.
• Natural Gas: India is also producing natural gas, much like crude oil. With 10.7 billion in imports in 2021, it holds the fourth-place position internationally. With a total contribution of 0.7% to the global reserve, India ranks 22nd in terms of natural gas reserves.  

4. Base Metals

• Aluminium: India produces 2.8 million metric tonnes of aluminium annually in the category of base metals. Aluminium is one of the most widely used metals in commodity trading due to its variety of uses. 
• Copper: Due to its strong demand, copper has a high level of market liquidity and is a preferred commodity for trading.
• Zinc: India is a major producer of zinc due to its numerous uses in building, industrial, and electrical applications. It produces 1.5 million metric tonnes of zinc annually, ranking it as the eighth-largest producer in the world.  India is a source of zinc imports for nations including China, Singapore, the US, and Japan. 

How does the Commodities Market Work in India?

The financial instruments involved in the commodities market in India are normally traded through the popular exchange markets well known as Indian Commodity Exchange (ICEX), National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX). Here's how commodities are traded in India.

Trading Instruments

In India, business involves future trading contracts and spot trading on commodities. In future contracts, a legally binding contract is made between the buyer and the seller to sell the commodities at a certain price which is at an agreed future time. Whereas in spot trading the trading takes place immediately; there is no contract. 

Participants

In a commodity market, a different variety of participants takes place like hedgers, speculators, and arbitrageurs. Hedgers are the ones who protect themselves against fluctuation in prices. Speculators are traders and investors who make predictions about the price movements. Lastly, arbitrageurs are those who attempt to take profit from price discrepancies between different markets.

Settlement and Delivery

The most traded commodity in India can be settled in two ways: through the physical delivery of the commodity or via cash settlement. In cash settlement, the difference between the contract price and the market price is settled through cash. Whereas in physical settlement there is a real delivery of the commodity. This happens mostly in the case of agricultural products.  

Regulation

The Securities and Exchange Board of India (SEBI) regulates the commodity market in India. The role of SEBI is to ensure the safety of traders, transparency, and to regulate the trading practices.

Conclusion 
The most traded commodities in India are rice, wheat, sugar, cotton, tea, spices, pulses, oilseeds, dairy products, iron and steel, petroleum products, jewels, and jewellery. These goods are essential for satisfying domestic demand, sustaining diverse businesses, and boosting India's economy. In India, there are several commodities trading applications available where one may trade in stocks, metals, and agricultural items. As one of the leading commodities brokers in India, BlinkX attracts a sizable community of traders by providing unmatched services and an easy-to-use smartphone BlinkX trading app.