One of the most unique features about the commodity market is the convenience of extended trading hours. Trading on the exchange’s Commodity Derivatives segment happens every day between Monday to Friday excluding the weekends and designated holidays. The market timings of the commodity derivatives segment are:

The commodity market is open for approximately 15 hours from 9 a.m. to 11.30/11:55 p.m. The timing is purposely kept long to match the commodity prices with international prices in the European and US markets.

In 2014, a government panel proposed longer trading hours at commodity bourses to boost global competitiveness and coincide with Asian and Australian markets. Trading hours in India concurred with European markets but had no overlap with Australia and Asia, indicating a lot of untapped potential. The panel also argued that extended trading hours in the commodity futures markets lead to better price discovery and risk management.

Finally in 2018, India’s commodity bourses — Multi Commodity Exchange (MCX), National Commodity & Derivatives Exchange (NCDEX), and Indian Commodity Exchange (ICEX) extended the time for trading in agricultural commodity derivatives by an hour from December 31, 2018, following a Securities and Exchange Board of India (Sebi) circular.

Both exchanges announced the new trade opening time as 9 am from the initial 10 am. These exchanges also extended the closing time by an hour to 6 pm for all agricultural commodities.

What are the advantages of the extended commodities trading hour?

Commodities and currencies are sensitive to global macroeconomic policies and other external factors; therefore, it makes sense to align the trading hours to the Western and Asian markets. Extended commodity trading hours are one of the most significant benefits available to the investors. Trading beyond normal hours enables investors to add to offload holdings in their portfolios based on market-moving developments.

Trading during extended hours can be a massive advantage to those who cannot participate during normal market hours. Once you gain experience in commodities trading, you can also plan your trades by analyzing the impact of the news on the market. After a thorough study, you can make strategic purchases just before the market opens.

Being universal in nature and use, commodity derivatives have a global appeal. Their supply-demand equations have a huge bearing on the investment decisions for those looking to hedge, globally. This is also the reason why most of the commodities are globally referenced.

The best trading sessions in the commodities derivatives market

The commodities base metals, precious metals, and cotton are traded from 11.30 am-11.45 pm because these are very actively traded instruments on international exchanges such as the CME group.

Though extended trading hours have a distinct set of advantages, you need to keep in mind that all the trading hours do not show uniform attributes. There are several factors that influence the performance of the commodities trading throughout the day.

Regardless of whether your trades are focused on precious metal, natural gas or agri commodities, there is a specific time suited for them. Mostly, these periods happen during the 30 minutes preceding or following the market opening or closing bell. In this period, people hurry to close existing trades and open new ones. As a result, the liquidity increases, creating several profitable trading opportunities.

Best time to trade:

The most opportune time of the day would differ across markets and commodity exchanges, but here are some of the best trading hours as per experts:

WTI Crude Oil: The optimum time of trade crude oil is from 1pm to 6.30pm (UK time) – because at this hour, the New York Mercantile Exchange (NYMEX) is operational, and the market witnesses high liquidity.

Agri commodities: You need to watch out for the news release of the World Agricultural Supply and Demand Estimates (WASDE), because it has an instant impact on the prices of soybean, wheat, corn, etc.

Gold: Gold prices usually exhibit higher volatility around the London session open (1:30 PM IST), the U.S. pre-market hours (5:30 PM IST–7:00 PM IST), and U.S. Wall Street open (7 PM IST).

Risks related to extended commodity trading hour

As the commodity market operates for a longer duration, there are times when there are limited market participants. Such a scenario stokes the risk of the expiration of the commodity contract before the seller finds a buyer. The contract ultimately has no value after its expiration. However, exchanges have deployed several liquidity makers and addressed this problem, but certain situations are still risky.

To activate your commodity segment on Axis Direct, log on to:Activate Derivatives