Earlier this week, Egypt announced the establishment of the commodityexchange in October.

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.

It is 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 markets, where goods are spoiled. It is an integrated enterprise with an industrial and a commercial part.

The commodity exchange 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 of 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.

Madbouli added that it also pushes to create transparency in pricing and thus contribute to reducing inflation resulting from fluctuating commodity prices, in addition to enhancing the ability to export products of small farmers after issuing a birth certificate for products traded on the exchange.

The government is currently coordinating with banks to announce the establishment of the commodity exchange next October, as Minister of Supply Ali Meselhi stated that it was agreed that the share of the commodities exchange would be 60 percent for the government and 40 percent for the private sector, clarifying that the general framework was agreed upon with the Egyptian stock exchange.

Prime Minister Madbouli held a meeting to follow up the steps of establishing the commodity exchange in Egypt in the presence of Minister Meselhi, Chairman of the General Federation of Eyptian Chambers of Commerce and Chairman of Cairo Chamber of commerce Ibrahim El-Araby, Chairman of the Egyptian Stock Exchange Mohamed Farid, and officials of a number of concerned parties.

For his part, Mr. Mohamed Farid, Chairman of the Egyptian Stock Exchange, reviewed the features of the project of establishing the Commodity Exchange in Egypt, where he pointed out that the establishment of a commodity exchange for the present market aims to have a regulated market for the trading of Storable goods, and to be attractive to a larger segment of traders and investors to deal with them. This would provide a market that competes with regional and global exchanges.

He explained that the establishment of the commodity exchange will have a positive impact on the farmer, a regulated market for commodities maybe stimulated if combined with futures and options contracts - agriculture to increase the cultivated areas of the traded commodity due to the existence of detailed data on the trading of these commodities, enabling the farmer to agricultural planning, According to the Head of the Exchange, the existence of such a commodity exchange is an important mechanism for pricing goods through market mechanisms of supply and demand, and a mechanism for gradually collecting data on dealers (traders and brokers) and stores that will be used as stores eligible to deal on the stock exchange.