You cannot trade in certain agricultural commodities like Kapas and Cotton Candy because these contracts have very low liquidity. These commodities trade very rarely, which creates significant risks for traders.
Risks of trading illiquid agri commodities
When you trade in illiquid agricultural commodities, you face two main risks:
- Difficulty exiting positions: You may be unable to exit your position due to a lack of buyers or sellers, which could result in your position being marked for physical delivery
- Wide bid-ask spreads: The difference between buying and selling prices is higher, meaning your orders may execute at prices far from your intended level
Due to these risks, trading in these illiquid agricultural commodities remains prohibited.
The client shall be responsible for squaring off all open positions. While Zerodha may square off positions, it is under no obligation to do so. The selection and sequence of such square-offs are at Zerodha's sole discretion. Zerodha shall not be held liable for any loss or damage resulting from exercising or not exercising this right. To learn more, see
Risk Disclosure Document (RDD).