Mon. Oct 2nd, 2023
What is NCDEX

The National Commodity and Derivatives Exchange Limited (NCDEX) is an online multi-commodity exchange in India. It was established in 2003 and is based in Mumbai. 

NCDEX is a public company with equity from financial institutions and corporations. In terms of market share for agricultural derivative contracts for the Financial Year ending March 2021, NCDEX is the largest agricultural derivatives exchange in India, with a 75% market share.

The exchange has a nationwide presence and operates under the regulatory framework of the Commodities Futures Markets Regulation Act, 1952, and is registered with the Securities and Exchange Board of India (SEBI).

NCDEX market offers trading in various commodity derivatives contracts, including futures and options. The exchange has 62 members, which include banks, financial institutions, corporates, primary dealers, brokerages, and individual investors.

NCDEX has been playing a vital role in the development of the commodity futures markets in India. It has helped to create a level playing field for all market participants and has also helped to promote price discovery and risk management in the commodities markets.

In this blog, we will discuss the meaning and benefits of NCDEX in detail.

What is NCDEX?

It is a commodities market that focuses only on the trade of agricultural goods. It has a board of directors possessing knowledge of the agricultural goods industry. The NCDEX’s primary goal is to offer a trading environment for market participants looking to transact in agricultural goods.

The Life Insurance Corporation of India (LIC), the National Stock Exchange, and the National Bank of Agricultural and Rural Development (NABARD) are some of the top financial institutions in India that support it.

The NCDEX is essential to India’s expanding agricultural industry because it allows investors to invest directly in various agricultural products and gives sellers access to year-round price discovery.

There are 22 commodities on NCDEX that are allowed for trading on the online market. The products include guars, pulses, and spices, none of which are traded on any other international marketplace. As a result, the commodities, which are relevant to India economically, play a significant role in the nation’s commerce.

Approximately 48% of the pulses, 50% of the food grains, 58% of the spices, and almost 100% of the sugarcane, cotton seeds, oilseeds, guar seeds, and cotton fibre produced in India are covered by price signals from NCDEX. The NCDEX price signals are delivered daily to around 2,100 rural markets.

What Does NCDEX Do?

NCDEX proffers an electronic platform for trading, which enables purchasers and vendors to indulge in the commerce of agricultural commodities by means of futures contracts. This exchange comprises a cluster of members who facilitate business on behalf of their clients.

The trading process on NCDEX involves the following steps:

  • Members of NCDEX place bids and offers on the trading platform.
  • Buyers and sellers negotiate prices for the commodities through the trading platform.
  • Once a trade is executed, the members of NCDEX settle the trade by either taking or giving delivery of the commodity.
  • NCDEX provides a delivery-based settlement mechanism, which ensures that the commodities traded are of good quality and meet the standards set by the exchange.

Benefits Of Trading In NCDEX

  • Even if a farmer is not engaged in the futures market, the NCDEX commodities exchange supports them in the price identification process and helps them price their commodities more properly.
  • With a year-round facility, NCDEX has enabled market transparency, assisting Indian farmers in learning agricultural prices.
  • Previously, middlemen, sometimes called commission agents, were in charge of most market analyses in India. Farmers’ costs for pricing data are decreased by eliminating middlemen with the advent of online commodities exchanges like NCDEX.
  • By standardizing the quality criteria of different products through contracts, exchanges like NCDEX Commodity have increased quality awareness. Farmers are increasingly concentrating on using agricultural techniques nowadays to produce high-quality crops.
  • Farmers now have access to a market ecology where they are well informed about market prices, enabling them to make wiser business decisions. The real-time exchange of commodities futures prices also helps farmers allocate resources for the next seasons.
  • Even small and retail traders may now trade using futures contracts to invest and engage in agricultural commodities, thanks to NCDEX.
  • It aids farmers in protecting themselves from risks and potential losses.
  • Although the NCDEX is yet new by specific standards, traders and significant market players already use contracts for hedging and speculation. As India’s agricultural industry expands in production and exports, this tendency is expected to persist.
  • Trading in commodities provides diversification to investors’ portfolios. NCDEX provides a platform for trading in a variety of agricultural commodities, which enables investors to diversify their portfolio.
  • NCDEX provides a platform for hedging against price fluctuations in agricultural commodities. This enables traders to minimize their risk exposure.


  1. What are the trading hours on NCDEX?

    The trading hours on NCDEX are from Monday to Friday, from 10:00 am to 5:00 pm.

  2. What is the margin required for trading on NCDEX?

    The margin required for trading on NCDEX varies depending on the commodity being traded and the contract size.

  3. What is the difference between MCX and NCDEX?

    MCX and NCDEX are the two leading commodity exchanges in India. MCX facilitates trading in both non-agricultural and agricultural commodities, while NCDEX focuses mainly on agricultural commodities.

  4. What is the use of NCDEX?

    NCDEX is the market leader in agricultural commodities trading, and you can use it to profit while trading in Indian agricultural products.

  5. What is traded in NCDEX?

    The NCDEX trades a variety of agricultural commodities, including barley, wheat, and soybeans. The exchange also hosts some contracts that serve as global benchmarks for commodities such as coriander, as well as steel, cotton, palm oil, and guar.

  6. Who regulates NCDEX?

    NCDEX is regulated by the Securities and Exchange Board of India (SEBI).

  7. Is gold traded on NCDEX?

    No, gold is not traded on NCDEX. The exchange primarily deals with agricultural commodities such as wheat, soybean, cotton, and many others.


Investing in commodities via NCDEX is a great way to diversify your portfolio. Examining a company’s free cash flow and cash flow statement can assist you in making an informed decision.

Commodity trading attracts a large number of participants due to the reasonable margins it provides. NCDEX is still in its early stages. However, by facilitating agricultural product trade in a bustling market, it has already established itself as a significant participant in the Indian agricultural industry.

By Vivz

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