Commodity Exchange

Topics: Futures contract, Chicago Board of Trade, Stock market Pages: 10 (2940 words) Published: October 10, 2013

Definition of 'Commodities Exchange'
An entity, usually an incorporated non-profit association, that determines and enforces rules and procedures for the trading of commodities and related investments, such as commodity futures. Commodities exchange also refers to the physical center where trading takes place. A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil,metals, etc.) and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts. Commodities exchanges usually trade futures contracts on commodities, such as trading contracts to receive something, say corn, in a certain month. A farmer raising corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price he will be paid when he delivers; a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises. Speculators and investors also buy and sell the futures contracts in attempt to make a profit and provide liquidity to the system. However, due to the financial leverage provided to traders by the exchange, commodity futures traders face a substantial risk.[1] Commodities exchanges across the Africa[edit]

Main commodity exchanges worldwide:
Africa[edit]
Exchange
Abbreviation
Location
Product Types
Africa Mercantile Exchange
AfMX
Nairobi, Kenya
Agricultural, Energy
Nairobi Coffee Exchange
NCE
Nairobi, Kenya
Coffee
Ethiopia Commodity Exchange
ECX
Addis Ababa, Ethiopia
Agricultural
EAST Africa Exchange Rwanda
EAX
Kigali, Rwanda
Agricultural
Agricultural Commodity Exchange for Africa
ACE
Lilongwe, Malawi

Auction Holding Commodity Exchange
AHCX
Lilongwe, Malawi
Agricultural
Mercantile Exchange of Madagascar
MEX
Antananarivo, Madagascar
Agricultural, Metals, Energy
Global Board of Trade
GBOT
Ebene, Mauritius
Metals, Forex
SAFEX (Johannesburg Securities exchange)
JSE
Sandton, South Africa
Agricultural

(Makola Agricuturals Exchange)

Accra, Ghana
Alternative Agricultural

What is a Tradable Commodity?
Tradable commodities are those goods and services for which there exist international markets. Nontradable commodities are those for which there are only domestic markets. The distinction of goods and services into “tradable” and “nontradable” is a distinguishing feature of models of international trade. Certain commodities may be nontradable either intrinsically (because they do not travel well; land, for example) or because they are unprofitable to trade, given the costs of transportation or the imposition of tariffs and quotas.

Definition Of Trade.
trade  (trd)
n.
1. The business of buying and selling commodities; commerce. See Synonyms at business. 2. The people working in or associated with a business or industry: a textile-exporting publication for the trade. 3. The customers of a specified business or industry; clientele. 4. The act or an instance of buying or selling; transaction. 5. An exchange of one thing for another.

6. An occupation, especially one requiring skilled labor; craft: the building trades, including carpentry, masonry, plumbing, and electrical installation. 7. The trade winds. Often used in the plural with the.

v. trad·ed, trad·ing, trades
v.intr.
1. To engage in buying and selling for profit.
2. To make an exchange of one thing for another.
3. To be offered for sale: Stocks traded at lower prices this morning. 4. To shop or buy regularly: trades at the local supermarket. v.tr.
1. To give in exchange for something...
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