Commodities Traded on the NCDEX
NCDEX commodities fall into four categories: agricultural items (like wheat, maize, guar seed), spices (coriander, cumin, turmeric), pulses and oilseeds (mustard, chana, castor), and others like cotton and sugar. Guar seed, guar gum, and cottonseed oilcake are among the most actively traded commodities on the exchange.
What does NCDEX do?
Several factors influence the prices of agricultural products, causing them to fluctuate based on market conditions. External factors such as storms, droughts, early or delayed monsoons, and natural calamities significantly impact pricing. To mitigate potential losses, a farmer anticipating a price drop may seek financial security through a futures contract. This contract allows them to sell their produce at a pre-determined price on a future date. NCDEX plays a crucial role in facilitating these trades, acting as an intermediary between farmers and buyers.
How does NCDEX works?
NCDEX, a professionally managed multi-commodity exchange, is primarily an online platform for buying and selling agricultural commodities. However, it has widened its horizons and started trading in other commodities, such as energy resources and metals.
How to trade at NCDEX?
- Open a trading account with an NCDEX-registered broker.
- Submit KYC documents such as Aadhaar, PAN, and bank statements.
- Deposit the required margin amount to activate your account.
- Choose a commodity and the preferred trading instrument.
- Place buy or sell orders through the online platform.
- Monitor positions and manage risk using available tools.
- Settle trades through physical delivery or cash settlement.
Trading on NCDEX is easy and investor-friendly. To start, open a commodity trading account with an NCDEX-registered broker and link it to your Demat account. Once active, ensure sufficient funds are available in the account to begin trading in your preferred commodities.
NCDEX Financial Performance
NCDEX (National Commodity & Derivatives Exchange) recently announced its financial results for FY25, showing a profit of ₹234 crore. However, this profit mainly came from one-time gains through selling some strategic assets—not from better business operations. In fact, while they had a net loss of ₹27.7 crore last year, the current profit hides a drop in their regular income from core business activities.
What does NCDEX primarily trade?
NCDEX offers the widest selection of agricultural commodities in India, totalling 23 permitted items. These include vital produce such as pulses, spices, and guar—commodities that are largely absent from global exchanges but hold economic significance for India. They also represent a valuable part of India’s international trade framework.
Advantages of NCDEX
Trading on NCDEX offers portfolio diversification, transparent pricing, and efficient risk management. Its digital platform ensures secure, structured access to a wide range of agricultural commodities, making it a valuable marketplace for both institutional and retail investors.
1. Market transparency
NCDEX has greatly contributed to increasing market transparency by providing an online platform to trade in commodity derivatives. The process of buying and selling commodity derivatives happens online, and every investor can review and analyse the market prices, expiry dates, and other factors without any possibility of fraud or scams.
2. Effective price discovery
NCDEX provides a transparent and efficient platform for price discovery of agricultural and other commodities. This helps farmers to price their products more accurately even if they are not participating in the derivatives market.
3. Lower costs
NCDEX has reduced the cost of price data for farmers by removing middlemen. Previously, intermediaries controlled market information, but the platform now empowers farmers with direct access to pricing and trade insights.
4. Improved agriculture practices
NCDEX has played an important part in developing improved agriculture practices in the country. The introduction of the exchange has increased overall quality awareness through standardisation of quality requirements. Now, farmers are more aware of producing high-quality crops.
How to open an NCDEX Demat account?
Now that you understand NCDEX, here’s how you can open a demat account for commodity trading.
1. Choose a stockbroker
Compare and analyse various stockbrokers who are members of the NCDEX commodity exchange. Compare their features and associated costs to find the most suitable one.
2. Fill out the application form
Complete the application form to open the NCDEX demat account with all the personal and bank details. You will also have to submit documents such as a PAN card.
3. In-person verification
In-person verification is compulsory to open an NCDEX demat account. The stockbroker will verify all the information and documents before approving them.
4. Demat account opening
After successful verification, the stockbroker will open your NCDEX demat account. You must deposit margin money after the account is opened to start NCDEX trading.
Conclusion
The NCDEX is one of the largest commodity trading exchanges in the country. The exchange specialises in agricultural commodities and offers an efficient and transparent way to profit from the price changes in these commodities.
However, before you start trading in derivative contracts available on the NCDEX commodity platform, remember to check the mode of settlement. Some contracts are mandatorily settled via physical delivery, meaning that the commodity you purchase will be physically delivered to you if you hold the contract until expiry. If you don’t wish to take physical delivery of commodities, make sure you square off your open positions before the contract expiration date.
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