Earlier this week, Egypt announced the establishment of the commodity exchange in October. There are still some questions about this kind of exchange, how it works, and how it will regulate the prices of the commodities in Egypt. Egypt Today explains. A commodity exchange is a legal entity that determines and enforces rules and procedures for trading standardized commodity contracts and related investment products. A commodity exchange also refers to the physical center where trading takes place, being a market in which products and commodities are sold in bulk.
In fact, the first fruit and vegetable exchange was established in Badr City, Beheira Governorate, in Unit No. 1 to store vegetables and fruits, instead of at the markets, where goods are spoiled. It is an integrated enterprise with an industrial and a commercial part.
“The economic importance of the commodity exchange is that it will contribute to putting Egypt on the global map of commodity trading, through the planned stock exchange to exploit its strategic location and contribute to attracting foreign capital,” Prime Minister Mostafa Madbouli said on Sep. 22.
Madbouli added that it will also increase the state's ability to plan its needs for basic commodities that may be traded in the regulated market. He emphasized that the importance of establishing a commodity exchange in Egypt is to protect small farmers by collecting, classifying and pricing their production.