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COMMODITY OR PRODUCE EXCHANGE

A commodity exchange is an original market which functions according to its own rules and regulations and which is meant for purchase and sale of commodities, both for current and future deliver by its members. The commodity exchange is generally used synonymously with the produce exchange. But they are not one and the same thing. A produce exchange is deals in only those commodities which are raw materials like agricultural goods, minerals and forest products, while a commodity exchange deals in all kinds of goods, whether raw materials or manufactured goods. Therefore a commodity exchange deals in an agricultural, minerals, forest and manufactured goods as well.

But we can use the two terms as interchangeable.

OBJECTIVES AND FUNCTIONS OF A PRODUCE EXCHANGE

To provide a trading place for its members

To provide for the regulations of the business of its members

To provide a machinery for settling disputes among its members

To provide for a system for inspection, instrument and grading of products

To obtain and disseminate market information useful to its members in ascertaining the price trends and changes in demand and supply

To secure the price level for the same commodity with the help of modern means of communications

To maintain stability in the market through a device know as hedging

To provide a clearing house through which delivery of goods and payments for the same can be effectively made

Thus a produce exchange renders very useful service to producers, middlemen and even the final consumers. But it should be noted that the produce exchange does not itself purchase or sell goods as an organization. It only provides facilities for carrying on dealing and regulates those dealings of its members. The number of members is limited by its constitution. A member can transfer his membership as per the rules of the produce exchange. Only members are entitled to do business in the produce exchange. I strongly advice to salespeople to have more knowledge about present situation and activities of Commodity Exchanges across the world, which enable them to access more business knowledge and planning accordingly for handling key accounts.

Some Important Commodity Exchanges in India

Indian Commodity Exchange Limited, ICEX India

Multi Commodity Exchange - MCX, India

National Commodity and Derivatives Exchange - NCDEX, India

National Multi-Commodity Exchange of India Ltd - NMCE, India

REPUTED COMMODITY EXCHANGES ACROSS WORLD

SUITABILITY OF GOODS HANDLED BY A PRODUCE EXCHANGE

All goods are not suitable for being handled in a produce exchange. The goods to be handled by a produce exchange must satisfy the below conditions.

The goods must be durable

They should be homogeneous

They should be easily graded

They should be traded in large quantities

They must have a constant demand

There should be fluctuations in their prices

Their supply should be free

IMPORTANCE OF PRODUCE EXCHANGES

Produce exchanges are very important to the business community. The producers are able to make a proper estimate of the cost and receipt of their goods. Since the goods handled in a produce exchange are standardized and graded, the dealers are able to get advances from the banks against the security of these goods. The produce exchanges help to equalize the price prevailing in different markets. They also provide facility for hedging transactions so to eliminate the risk arising from price fluctuations. It is said that commodity exchanges serve as the barometer of the market conditions. They help the producers and traders to shift the risks of possible price fluctuations to the specialized risk bearers like speculators.

FUTURE TRADING

FITNESS TIPS TO SALESPEOPLE


KNOW YOURSELF

AGRICULTURAL GOODS MARKETING




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