COMMODITY EXCHANGE
CONTENT
- Benefits of Commodity Exchange
- Constraints to Commodity Trading
- Meaning of Commodity, Commodity Exchange and Stocks
- Differences between Commodities and Stocks
- Similarities between Commodities and Stocks
Benefits of Commodity Exchange
The following are the major benefits or importance of commodity exchange. They also entail the roles which commodity exchange plays in the economic development of a country.
(i) Increase in Agricultural Production: Commodity exchange has helped in enhancing and promoting large-scale agricultural production. For example, those engaged in agriculture will be inclined to plant seeds for crops that they know are guaranteed to be sold so long as they achieve minimum standards of quality.
(ii) Stabilization in Agricultural Product Pricing: This is done by fixing price to be executed in trading at a pre-determined period so as to prevent the risks of price fluctuation in the world market.
(iii) It encourages the exploration of solid minerals: The exploration of metals and oil is encouraged since present and future demands are visible.
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