New Commodities on MCX - Cotton, Castor Seed & More Coming?

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KolkataKing | Posted: Nov 10, 2024
Friends, I read somewhere that MCX and NCDEX are planning to introduce new agri commodities for trading. Cotton futures might come back, and they are also considering castor seed, cardamom and some other spices. Anyone has confirmed information? Last time cotton was banned due to manipulation issues, so will govt allow it again?

chethan

AhmedabadTrader | Posted: Nov 11, 2024
Cotton futures were suspended in 2015 I think. Now market has matured, so SEBI and govt are considering to reintroduce it. But no fixed date yet. For Gujarat traders like me, cotton and castor seed are very important. These are major cash crops here. If futures trading starts, it will help farmers and traders both for price hedging. Right now we are dependent on local mandis and spot prices which are very volatile. Future market will give better price discovery.

chethan

CommodityExpert_Pune | Posted: Nov 11, 2024
Let me give you actual status of new commodity introductions: Likely to be introduced soon: - Brent Crude Oil options (MCX already has crude futures) - Steel long products - Urea (very important for farmers) - Cotton (under discussion, not confirmed) Under consideration: - Cardamom - Arecanut - Castor seed - Rubber (was there before, might come back) The issue is that government is cautious about agri commodities because of political reasons. If prices rise too much due to speculation, it becomes big problem. For metals and energy, there is less restriction. So those new products will come first.

chethan

HydTrader2020 | Posted: Nov 12, 2024
What about battery metals? I heard MCX is considering lithium, cobalt etc for EV sector. This makes sense because India is pushing electric vehicles heavily. Also, rare earth elements might come. China controls 70% of rare earth supply, so having futures market in India will help our manufacturers. These new age commodities have more potential than traditional agri products in my opinion. What you all think?

chethan

TamilNadu_Investor | Posted: Nov 13, 2024
@HydTrader2020 good point about battery metals. But problem is that India does not produce lithium or cobalt in large quantity. So it will be mostly import dependent contracts. For commodities like turmeric, jeera, cardamom - India is major producer and consumer. So domestic futures market makes more sense here. Actually NCDEX already has turmeric and jeera futures. But volume is very low. Unless participation increases, new commodities won't be successful. One positive thing - FPI (foreign portfolio investors) are now allowed in commodity derivatives. This can bring more liquidity to market.

chethan

SuratDiamondTrader | Posted: Nov 14, 2024
Friends, one commodity that should definitely be introduced is Natural Gas options. Currently MCX has only natural gas futures. But for hedging purpose, options are very useful. USA has very active natural gas options market. India gas consumption is growing 7-8% every year. With govt pushing for more CNG and PNG connections, demand will only increase. I work in energy sector, and many companies are asking for better hedging instruments. SEBI should approve this quickly.

chethan

BengaluruTechie | Posted: Nov 15, 2024
Has anyone looked at copper options? MCX introduced it few months back but volume is still low. Copper is very important for electrical and construction industry. Also heard that exchange is planning index based commodity derivatives - like a basket of metals or agri products. This will be similar to Nifty/Sensex but for commodities. Could be interesting for portfolio diversification. One request to experienced traders here - which commodity has best liquidity for intraday trading? Gold and silver are obvious choices, but any other suggestions?

chethan

ommodityExpert_Pune | Posted: Nov 15, 2024
@BengaluruTechie for intraday, stick to these high liquidity commodities: 1. Gold - best liquidity, tight spreads 2. Silver - good volume, more volatile than gold 3. Crude Oil - excellent for intraday, responds to global news 4. Natural Gas - very volatile, good for experienced traders 5. Copper - decent volume during market hours 6. Zinc - moderate liquidity Avoid agri commodities for intraday unless you know the sector very well. Their movements are seasonal and less predictable. For new commodities coming up, wait atleast 2-3 months after launch before trading actively. Initial days will have low volume and high volatility.