Why is trading in some agri commodities not allowed?
Trading in Kapas, Cotton Candy, and some other agri commodities is not allowed due to illiquidity. These contracts are traded very rarely and carry risks such as:
- A trader is sometimes unable to exit the position, due to which the position might be marked for physical delivery.
- The difference in the bid-ask spread is higher, meaning the orders may get executed at far-away prices.