A Look at Asia Commodity Exchanges

Whenever there is a talk of the commodities in Asia, there are different commodities that are involved such as TOCOM, (Tokyo Commodity Exchange), Sydney Futures Exchange, Oman Crude Oil of the DME (Dubai Mercantile Exchange), MCX (Multi Commodity Exchange) of India, AFET (The Agricultural Futures Exchange of Thailand) and DCE (DaLian Commodity Exchange) in China. Apart from these, there are many other commodities as well. Have you thought or heard of them anytime? You might have thought that Bursa Malaysia trades only the benchmark KLCI (Kuala Lumpur Composite Index), and the equity issues that prevail in the country. But it is the home of FCPO.

In fact, Malaysia is the chief exporter of palm oil contributing around 50 percent of the global production of the commodity. This commodity is used in the shortening of fats among others and in margarine. Also, the palm oil fruit that is the source of palm oil produces palm kernel oil that is non-edible and this is used widely in cosmetics. One unit of palm kernel oil is there in every ten units of the palm oil.

India has a very long history of futures commodity trading. At the time of the American Civil War between 1861 and 1864, the British bought cotton or white gold from the country to feed the looms that were located in Manchester and Lancashire as they could no more buy these commodities from the Americans. Five years after the formation of the Chicago Board of Trade, Bombay Cotton Exchange was established and this happened as early as 1875. Now, the NCDEX (National Commodity & Derivatives Exchange), MCX (Multi-Commodity Exchange of India) and NMCE (National Multi-Commodity Exchange) comprise the mass of commodity exchanges in the country. MCX being the largest commodity exchange in India has 73 products including spices, metals, and grains such as rice, soybeans, and maize that are available for trading.

The NCDEX is the second commodity exchange that provides an equally broad product lineup such as mustard oil and guar seeds. However, it trades many same products as the former. The exchanges will consolidate over time, and we will get to know which one has lower costs, improved price discovery, and increased liquidity. The TGE (Tokyo Grain Exchange) that was founded in 1952 offers future, and also cash settled futures in the agricultural products such as coffee, raw silk, soybean mean, soybeans, corn, Azuki bean, and raw and refined sugar. Thailand is the major producer of rubber globally and they also produce tapioca start premium grade and tapioca chip. It is produced from the cassava plant, and it is the third largest producer of tapioca next to Brazil and Nigeria.