Cash Commodity

A cash commodity, also referred to as a physical commodity or spot commodity, is the actual physical good — such as gold, crude oil, cotton, or wheat — that is available for immediate delivery and settlement at the prevailing spot price. It is distinguished from commodity futures contracts, which represent an agreement to buy or sell the commodity at a future date and price. In India, cash commodity transactions occur in physical markets, mandis, and direct trade between buyers and sellers. For commodity exchanges like MCX and NCDEX, the cash or spot price serves as the reference price against which futures contracts converge at expiry. The basis — the difference between the cash price and the futures price — reflects carrying costs such as storage, insurance, and financing, and narrows as the futures contract approaches its delivery date.