Commodity Products – Physical & Electronic Trading

Introduction

Commodities can be traded as physical goods or as electronic financial instruments.

1. Physical Trading (Spot)

• Traditional "Mandi" system.
• Goods are inspected physically, weighed, and sold.
• Issues: Quality assurance, Storage, Logistics.

2. Electronic Trading (Derivatives/Spot)

• e-NAM (National Agriculture Market): Pan-India electronic trading portal linking mandi.
• Commodity Derivatives: Buying Gold futures on MCX without seeing physical gold.

3. Warehousing Development and Regulatory Authority (WDRA)

• Crucial for electronic trading.
• Farmers deposit produce in WDRA-registered warehouses -> Get Electronic Negotiable Warehouse Receipt (e-NWR).
• This e-NWR can be traded or used to get bank loans.

Summary

• Trend: Identifying standard quality -> Digitizing it -> Trading it.
• e-NAM: Connecting Mandis.
• e-NWR: Receipt representing stored goods.

Quiz Time! 🎯

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