Commodity Exchange
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
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