Commodities trading allows you to trade in a variety of commodity products on exchanges, such as the Multi Commodity Exchange of India (MCX) and the National Commodity and Derivatives Exchange (NCDEX), according to the Securities and Exchange Board of India (SEBI) regulations. Demand-supply dynamics and geopolitical events set the ground in this space for traders to operate and gain from it.
Trading in commodities has been taking place around the world for centuries. It has gathered pace with modern exchanges, facilitating seamless global trade in metals, energy, agricultural products and more. As per reports, the global commodity market is projected to reach a value of $123,000 billion this calendar year, while the Indian market is set to reach $855.60 billion in the same period.
To help you understand the domestic demand for commodities and India's position in the global commodities market, let us take a close look at the most traded commodities in India.
India's commodity market has evolved into a vibrant sector, playing a crucial role in the nation's economy. Here are the 6 most actively traded commodities in India, reflecting a mix of agricultural products and essential resources:
During economic uncertainties and geopolitical tensions, gold is seen as a ‘safe-haven’ asset. Most traders invest in gold to protect their investments during periods of stock market fluctuations. Gold saw over 26% annual growth in 2024, its best in a decade. It is currently priced at ₹79,350 in the spot market and ₹76,600 in MCX futures.
In addition, gold offers several advantages to traders. It can be liquidated easily. Whether you need protection against inflation or a secure investment, gold remains an essential commodity in the trading world.
Crude oil is another big one on the list of most traded commodities by volume in India. It is the primary energy source for modern economies, powering industries, transportation and households. Hence, the price of crude oil significantly impacts global economies. For instance, disruptions in major oil-producing countries can affect supply, leading to an all-round spurt in prices.
Conversely, improvements in renewable energy reduce the demand for crude oil, thus putting downward pressure on prices. It provides ample opportunities for trades in various forms, such as futures contracts, options and ETFs. It is easily tradable on the exchanges and is thus, very liquid.
India has been seeing a rise in the use of natural gas, driven by its increasing adoption in industries and households over the last couple of decades. The key factors propelling its trade include government policies promoting clean energy, rising demand from power generation and fertiliser sectors, and fluctuating global prices of crude. As India transitions to a greener economy, natural gas helps reduce dependency on coal.
In addition, it supports cleaner energy solutions while addressing the nation’s growing energy needs. With approximately 50% of domestic consumption met through liquefied natural gas (LNG) imports, natural gas is becoming increasingly integral to India’s energy landscape and economic growth.
Copper is usually called "Dr. Copper" because it reflects the economic health of a nation or even the world due to its widespread use in construction, electrical wiring, and emerging renewable technologies. Emerging countries are driving the higher demand for copper due to their focus on development and infrastructure.
As per reports, India produced 565,000 metric tonnes of copper in 2018-19. The market is projected to grow at a CAGR of 6.6% from 2024 to 2030, reaching 10.3 lakh tonnes by 2030. Hence, robust industrial demand for copper in construction, manufacturing, electric vehicles (EVs) and renewable energy projects makes it one of the most traded commodities in India.
Silver is unique, being both, a precious metal and also used in industries. Similar to gold, it often acts like an economic hedge. Its industrial applications are vast, particularly in electronics, renewable energy and healthcare. Its importance has increased with the advent of solar panels and EVs, increasing its demand as the world moves to cleaner technologies.
Global demand for silver in industrial applications is expected to increase by 46% by 2033. Traders can make the most of this opportunity by trading in silver bullion, coins, futures, or ETFs.
Although less attractive than gold or crude oil in terms of trading, cotton is the lifeblood of the global economy. It has great demand in the textile industry with global cotton production expected to grow by 2.6% by the end of 2025, the highest since 2019-20. Being the most widely used natural fibre, it is constantly in high demand for clothing, home furnishings and industrial products, making its way to the list of commodities in MCX.
Weather conditions, supply chain disruptions and shifts in global demand influence cotton prices. For example, bad weather can result in lower yields and higher prices, while improvements in synthetic fibres can reduce the demand for cotton. Traders can trade in cotton through futures contracts. However, they must carefully time their trades to take advantage of seasonal price patterns throughout the year.
Commodity trading provides traders with several opportunities to diversify their portfolios, capitalise on global trends and hedge against inflation. There are several ways to participate in these markets, including through gold, crude oil or copper. Investing in commodities can offer a hedge against economic uncertainties and inflation, making it an attractive option for risk management. In addition, commodities often move independently of traditional stock markets, allowing for effective diversification.
However, successful commodity trading requires thorough research and a keen awareness of market dynamics. Factors such as geopolitical events, weather patterns and changes in supply and demand can significantly influence the prices of the most traded commodities in India. Understanding these elements is crucial for making informed trading decisions.
Hence, for those willing to invest time and understand the intricacies of commodity trading, these markets can be a valuable addition to any trading strategy. Commodities trading offers potential rewards alongside inherent risks.