Commodities Vs Stock Markets

	Stock markets	Commodity markets
Quality	One unit of a security does not differ from another of the same type in terms of its face value and characteristics.	Each commodity/product have several grades or varieties and each lot in a grade may vary from other lots in the same grade
		Quality also deteriorates due to improper storage and transport conditions. Commodity deliveries therefore have far greater implications for buyers and sellers than mere payment or receipt of contractual price, as in the case of buying or selling of securities
	Most investors in securities do not need any facility for hedging. They invest in securities either to earn regular income from dividend or interest, or to profit from the subsequent price rise.	A commodity futures market is primarily a hedging market, and not a market for delivery. Deliveries need to be issued and received only in a residual sense to maintain a parallel or near-parallel relationship between the physical and futures market prices to facilitate efficient hedging
Price Discovery	Security futures prices have no such equivalent role.	Price discovery by a futures market also has a much more basic role to play in a commodity market than in the securities market.
Factors	Not many (its supply is almost fixed, with demand varying as per the financial performance of the company, or the authority, and general market expectations),	Factors affecting commodity prices are far too many and complex Supply side: depends on conditions such as area or production capacity, weather, infrastructure supplies and inputs like water, power, seeds, yields or processing/ manufacturing out-turns, imports and exports. Demand is determined by the population growth and shifts in demographic characteristics, changes in incomes and exports, besides the diverse elasticities of incomes and prices.
Contract Specifications	For an individual security futures, or even for an index futures of several securities put together, is a relatively simple exercise	More complex and involves specification of quality, delivery, duration etc.,