Commodity trading has become an integral part of India’s financial infrastructure, providing traders with means to hedge risk, diversify portfolios, and capitalize on global market movements. Unlike the stock exchange where shares of companies are traded, commodity trade is concerned with tangible goods like metals, energy, and agricultural produce.
This guide will walk you through commodity trading, the Indian major exchanges-MCX and NCDEX, and lots of other key points like lot sizes and market timings, which are essential to legion into your successful commodity trading venture in India.
What is Commodity Trading?
The practice of trading is buying and selling raw materials or primary goods on spot or derivatives markets (largely futures and options).The broad classification of commodities includes:
Hard Commodities: Metals, energy (gold, crude oil)
Soft Commodities: Agricultural products (wheat, cotton)
Major Commodity Exchanges in India: MCX vs NCDEX
MCX (Multi Commodity Exchange of India Ltd.)
Website: https://www.mcxindia.com/
Established: 2003
Headquarters: Mumbai
Regulator: SEBI
Focus: Non-agricultural commodities (metals, energy)
Popular Commodities Traded on MCX:
Bullion: Gold, Silver
Energy: Crude Oil, Natural Gas
Base Metals: Copper, Aluminium, Zinc, Nickel, Lead
NCDEX (National Commodity & Derivatives Exchange)
Website: https://www.ncdex.com/
Established: 2003
Headquarters: Mumbai
Regulator: SEBI
Focus: Agricultural Commodities
Popular Commodities Traded on NCDEX:
Soybean, Mustard Seed, Chana, Cotton Seed Oil Cake, Turmeric, Jeera, Guar Gum, Barley
Commodity Segments on MCX & NCDEX
| Exchange | Segment | Examples |
| MCX | Bullion | Gold, Silver |
| Base Metals | Copper, Zinc, Aluminium | |
| Energy | Crude Oil, Natural Gas | |
| NCDEX | Agriculture | Wheat, Soybean, Mustard, Turmeric |
Detailed Commodity Segments: Mega, Mini & Micro Contracts on MCX & NCDEX
Commodity trading offers flexibility in terms of contract sizes to cater to different types of participants—from large institutions to small retail traders. Contracts are typically categorized as Mega, Mini, and Micro based on their lot size and margin requirements.
Here’s a breakdown of the major traded commodities on MCX and NCDEX with their variants:
1. Gold (MCX)
Gold is the most actively traded commodity in India, widely used for investment, jewelry, and as an inflation hedge.
| Contract Type | Symbol | Lot Size | Margin (Approx.) | Use Case |
| Mega | GOLD | 1 kg | ₹2.5–₹3 lakh | Institutional traders |
| Mini | GOLDM | 100 gm | ₹25,000–₹30,000 | Mid-size traders |
| Micro | GOLDPETAL | 1 gm | ₹200–₹300 | Small/retail traders |
| Micro | GOLGUINEA | 8 gm | ₹1,800–₹2,500 | Gold savings, gifting |
Expiry: 5th of every month (or preceding business day)
2. Silver (MCX)
Silver is an industrial and investment metal with high volatility and liquidity.
| Contract Type | Symbol | Lot Size | Margin (Approx.) | Use Case |
| Mega | SILVER | 30 kg | ₹1.8–₹2.5 lakh | Professionals/institutions |
| Mini | SILVERM | 5 kg | ₹30,000–₹50,000 | Retail swing traders |
| Micro | SILVERMIC | 1 kg | ₹6,000–₹10,000 | Low-cap retail traders |
Expiry: 5th of every month (or preceding business day)
3. Crude Oil (MCX)
Crude oil is the lifeblood of the global economy and highly sensitive to geopolitical events.
| Contract Type | Symbol | Lot Size | Margin (Approx.) | Use Case |
| Mega | CRUDEOIL | 100 barrels | ₹2.5–₹3 lakh | Large traders, institutions |
| Mini | CRUDEOILM | 10 barrels | ₹25,000–₹30,000 | Short-term retail traders |
Expiry: 19th of the month or the preceding business day
Note: Crude oil is highly volatile—risk management is essential.
4. Natural Gas (MCX)
A key energy commodity, used in industrial and household consumption. Priced in mmBtu (Million British Thermal Units).
| Contract Type | Symbol | Lot Size | Margin (Approx.) | Use Case |
| Standard | NATURALGAS | 1,250 mmBtu | ₹50,000–₹75,000 | Volatility traders |
| Mini | NATURALGASM | 250 mmBtu | ₹10,000–₹15,000 | Small lot participants |
Expiry: Last business day of the month
5. Copper (MCX)
Used heavily in industrial manufacturing, copper prices reflect global industrial health.
| Contract Type | Symbol | Lot Size | Margin (Approx.) | Use Case |
| Standard | COPPER | 1 MT (1000 kg) | ₹1.5–₹2 lakh | Hedgers and traders |
| Mini | COPPERM | 250 kg | ₹35,000–₹50,000 | Smaller risk appetite |
Expiry: Last business day of the month
Other Base Metals on MCX
| Commodity | Symbol | Lot Size | Remarks |
| Zinc | ZINC | 5 MT | Also available as ZINCMINI (1 MT) |
| Aluminium | ALUMINIUM | 5 MT | Liquid metal with industrial demand |
| Lead | LEAD | 5 MT | Used in batteries |
| Nickel | NICKEL | 250 kg | High-value industrial metal |
Select NCDEX Agri Commodities
Agri commodities do not have “Mini” or “Micro” formats but have standardized lot sizes:
| Commodity | Symbol | Lot Size | Seasonal Impact |
| Soybean | SOYBEAN | 10 MT | Yes (Monsoon, harvest) |
| Mustard Seed | RMSEED | 10 MT | Yes |
| Turmeric | TURMERIC | 5 MT | Yes |
| Jeera (Cumin) | JEERA | 3 MT | Yes |
| Chana (Gram) | CHANA | 10 MT | Yes |
| Cotton Seed Cake | COTTONCAK | 5 MT | Yes |
Expiry: 20th of the month (or preceding business day)
Why Mega, Mini, and Micro Contracts Matter?
| Contract Type | Best For | Key Benefit |
| Mega | Institutional, Hedgers | Lower transaction cost per unit |
| Mini | Experienced retail traders | Flexible capital usage |
| Micro | Beginners, low-cap traders | Minimal risk exposure |
Pro Tip: Mini and Micro contracts are ideal for learning, testing strategies, and reducing exposure during volatile markets.
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Market Timings
MCX Market Timings
- Weekdays: Monday to Friday
- Morning Session: 9:00 AM – 5:00 PM (Agri Commodities)
- Evening Session: 5:00 PM – 11:30 PM / 11:55 PM (Metals, Energy)
- Morning Session: 9:00 AM – 5:00 PM (Agri Commodities)
NCDEX Market Timings
- Weekdays: Monday to Friday
- Agri Commodities: 9:00 AM – 5:00 PM
- Agri Commodities: 9:00 AM – 5:00 PM
Note: Evening session on MCX aligns with global markets like NYMEX and LME.
Lot Size in Commodity Trading
Lot size refers to the standardized quantity for each futures contract. Here are a few examples:
| Commodity | Exchange | Lot Size |
| Gold | MCX | 1 kg / 100g (Mini) |
| Silver | MCX | 30 kg |
| Crude Oil | MCX | 100 barrels |
| Copper | MCX | 1 metric ton |
| Soybean | NCDEX | 10 MT |
| Mustard Seed | NCDEX | 10 MT |
Expiry Days of Commodity Contracts
Futures contracts have a monthly expiry, though some may have weekly or bi-monthly durations.
- MCX: Last business day of the month
- NCDEX: Typically 20th day of the month (or preceding working day if it’s a holiday)
Traders should exit or roll over positions before expiry to avoid physical delivery unless they’re hedgers or institutions.
Types of Futures Contracts
- Futures Contracts
Standardized contracts to buy/sell a specific commodity at a predetermined price in the future.
- Options on Futures
Available in select commodities on MCX (e.g., Gold, Crude Oil), offering limited-risk opportunities.
- Mini and Micro Contracts
Smaller variants for retail participation—especially in Gold and Silver.
Commodity Indexes in India
Commodity indexes track price movements across a basket of commodities.
MCX iCOMDEX Series:
- Bullion Index: Gold & Silver
- Base Metal Index: Copper, Zinc, Nickel, Lead, Aluminium
- Energy Index: Crude Oil, Natural Gas
These indexes are used to track performance and may form the basis of index-based products.
Advantages of Commodity Trading
- Diversification: Moves independently from equity/bond markets.
- Hedging: Farmers, importers/exporters, and corporations hedge against price risks.
- Leverage: Trade large contracts with lower margin requirements.
- High Liquidity: Especially in commodities like Gold and Crude Oil.
- Global Exposure: Reacts to international events, allowing for macro-based trading.
Best Time to Trade Commodities
- MCX Metals & Energy: 6 PM – 11:30 PM (Aligns with NYMEX/LME)
- NCDEX Agri Commodities: 9 AM – 12 PM (Higher domestic participation)
- Avoid trading during low-volume lunch hours (1 PM – 2 PM) or at expiry due to volatility.
Factors Impacting Commodity Markets
- Global Demand & Supply: Major influence on pricing.
- Geopolitical Events: Conflicts or sanctions impact oil, gold.
- Currency Movements: USD strength/weakness affects international commodity prices.
- Weather Conditions: Monsoons, droughts impact agri prices.
- Government Policy: Export bans, MSP, taxes, and subsidies.
- Inventory Reports: EIA (Energy), LME (Metals), FCI (Food grains)
How Are Commodity Markets Different from Equity Markets?
| Feature | Commodity Trading | Equity Trading |
| Asset | Physical goods (oil, gold, wheat) | Shares of companies |
| Contract Type | Futures (and options) | Cash & Derivatives |
| Expiry | Yes, monthly | Only in derivatives |
| Trading Hours | Up to 11:55 PM (MCX) | 9:15 AM – 3:30 PM |
| Hedging Use | High (for businesses, farmers) | Low |
| Global Linkage | Strong (NYMEX, LME, CBOT) | Moderate |
| Volatility | High due to macro/geopolitical factors | Depends on company performance |
| Delivery Option | Mostly avoided unless hedging | Used in delivery-based trades |
Conclusion
In India, commodity trading through MCX and NCDEX provides an exhilarating opportunity for retail as well as for institutional investing. Given their strong linkage with global phenomena, long trading hours, and a thousand instruments (ranging from bullion to agri), commodities provide for diversification and strategic hedging. Because it is leveraged and volatile, therefore, and hence must be studied with the utmost discipline and rigor, a commodity market is not for speculation.
The commodity markets are great tools if used well by the farmers who want to protect their harvest from any distressed commodity price or by the trader who wants to earn out of global trends in commodity prices.
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