Commodity units determine how prices are quoted, trades are executed, and lot sizes are structured. These units vary by commodity type and exchange.
For example, gold is traded in kilograms on MCX and troy ounces on COMEX. Crude oil is quoted in barrels on NYMEX, while shipping contracts may use liters or metric tons.
This article covers:
- Standard units by commodity category (energy, metals, agriculture)
- Exchange-wise differences in units and lot sizes
- Key unit conversions with examples
- Tables for fast reference in live trading
This guide helps you understand how measurement systems work in commodity trading, so you can read quotes correctly, calculate positions accurately, and align with global standards.
Why Do Units Matter in Commodity Trading?
Units Define How Commodities Are Priced, Traded, and Settled
In commodity markets, units serve as the fundamental basis for contract structure, price quotation, and settlement. Every commodity, whether physical or derivative, is transacted using a standard unit of measurement that determines the trade volume.
For example, crude oil is typically quoted per barrel, while gold is priced per troy ounce. Exchanges establish these units to ensure uniformity in pricing and delivery obligations.
When a buyer agrees to purchase 1 lot of crude oil, the unit clarifies whether that means 100 barrels or another quantity.
The unit defines not just the price, but the margin requirement, tick size, and even the notional value of the trade.
Without standard units, price discovery would be inconsistent and contracts would be unverifiable. Units provide the structural backbone that allows risk hedging, speculation, and arbitrage to operate seamlessly across global markets.
What Happens When You Misread a Unit?
Misinterpreting units can result in substantial errors in position sizing, margin allocation, and contract valuation. A minor oversight, such as assuming a metric ton when the contract refers to a short ton, can distort exposure and lead to unintended financial consequences.
Incorrect unit assumptions may also trigger compliance issues, especially in leveraged trades where margin and lot size calculations depend on precise unit inputs. For institutional traders, unit errors in hedging models can cause basis mismatches, pricing anomalies, or failed settlements.
In cross-border transactions, unit confusion between metric and imperial systems often leads to order mismatches or over-hedging. Unit misalignment is not just a clerical issue, it is a structural risk in active trading.
Real-World Example: MCX Crude Oil vs NYMEX Crude Oil
Crude oil contracts on MCX are denominated in barrels, but the standard lot size is 100 barrels. On NYMEX, crude oil is also quoted per barrel, but one lot typically equals 1,000 barrels. While the unit of quotation is identical, the lot size, defined by the exchange, multiplies the trade exposure tenfold.
If a trader mistakenly assumes that both contracts represent the same volume per lot, it could result in under-hedging or over-exposure.
For example, a hedge of one MCX crude lot would cover only 10% of a single NYMEX lot. In derivative chains, this discrepancy magnifies slippage, slants the delta, and disrupts risk parity.
This divergence highlights the importance of not just knowing the quoted unit, but also understanding how that unit scales within the contract specification of each exchange.
MCX vs NYMEX Crude Oil Contract Specifications
| Specification | MCX Crude Oil Futures | NYMEX Crude Oil Futures |
| Exchange | Multi Commodity Exchange (India) | New York Mercantile Exchange |
| Contract Symbol | CRUDEOIL | CL |
| Quoted Unit | Per barrel | Per barrel |
| Lot Size | 100 barrels | 1,000 barrels |
| Contract Value (Approx.) | ₹6–7 lakh | $70,000–90,000 |
| Tick Size | ₹1 | $0.01 |
| Tick Value (Per Lot) | ₹100 | $10 |
| Initial Margin (Approx.) | ₹1.2–1.5 lakh | $6,000–7,000 |
| Contract Expiry | Monthly | Monthly |
| Settlement Type | Cash settled | Physical delivery (most cases) |
| Trading Hours (IST) | 9:00 AM – 11:30 PM | 6:00 PM – 5:00 PM (next day) |
Standard Units Across Commodity Categories (Energy, Metals, Agri)
Commodity units are not universal across categories. Each class, energy, metals, and agricultural commodities, uses distinct measurement systems aligned with physical trade norms and global exchange standards.
Traders must internalize these differences to avoid misquoting contract sizes, misunderstanding exposure, or executing mismatched hedges.
Table: Commodity → Unit → Lot Size
| Commodity | Category | Quoted Unit | Typical Lot Size | Exchange Examples |
| Crude Oil | Energy | Barrel | 100 / 1,000 barrels | MCX, NYMEX |
| Natural Gas | Energy | MMBtu | 1,250 / 10,000 MMBtu | MCX, NYMEX |
| Coal | Energy | Metric Ton | 1 MT / 100 MT | ICE, NCDEX |
| Gold | Metals | Troy Ounce | 100 oz / 1 kg | COMEX, MCX |
| Silver | Metals | Troy Ounce / Kg | 5,000 oz / 30 kg | COMEX, MCX |
| Copper | Metals | Metric Ton | 1 MT / 5 MT | LME, MCX |
| Aluminum | Metals | Metric Ton | 5 MT | LME, MCX |
| Soybean | Agriculture | Bushel / MT | 5,000 bushels / 10 MT | CBOT, NCDEX |
| Corn | Agriculture | Bushel / MT | 5,000 bushels / 10 MT | CBOT, NCDEX |
| Wheat | Agriculture | Bushel / MT | 5,000 bushels / 10 MT | CBOT, NCDEX |
| Cotton | Agriculture | Bale | 170 kg / 500 lbs | MCX, ICE US |
Energy Commodities: Crude Oil, Natural Gas, Coal
Energy commodities are priced and settled using industry-specific volumetric or thermal units. Crude oil contracts are almost always quoted per barrel, the global standard.
Lot sizes vary between 100 to 1,000 barrels depending on the exchange. Natural gas, in contrast, uses MMBtu (million British thermal units), a thermal unit reflecting energy content rather than volume.
Coal futures vary by region.
In India, coal is typically measured in metric tons, while international contracts, especially Australian or South African grades, are priced per tonne with calorific value adjustments. These variations are critical for physical delivery contracts where quality and energy output matter.
Metals: Gold, Silver, Copper, Zinc, Aluminum
Metal commodities are generally traded by weight, but the units differ across precious and base metals. Gold is quoted per troy ounce globally, while silver is traded either per troy ounce or per kilogram depending on the market. In India (MCX), silver is traded in kilograms, while COMEX uses troy ounces.
Base metals such as copper, zinc, aluminum, and lead are measured in metric tons, with standard lot sizes varying from 1 MT to 5 MT. Exchanges define both the unit and grade specifications, so identical units may still differ in purity or delivery format.
The distinction between troy ounce and avoirdupois ounce in gold or silver can lead to severe calculation errors if not accounted for. Traders operating across exchanges must track both the unit and purity standard.
Agricultural Commodities: Soybean, Corn, Wheat, Cotton
Agricultural commodities use units tied to traditional farming measurements. In North America, grains like soybean, corn, and wheat are traded in bushels, while most Asian and European contracts use metric tons. A single bushel has a fixed weight but varies by crop, 60 lbs for wheat, 56 lbs for corn.
Cotton is typically traded in bales, a unit representing compressed raw cotton. In India, cotton contracts are settled in bales of 170 kg, while in U.S. exchanges, the standard is 500 lbs per bale.
This discrepancy impacts physical delivery valuation and hedge ratio accuracy.
Understanding these agriculture-specific units is essential in managing both quantity and logistics risks, especially in cross-border transactions and spot-futures alignment.
How Commodity Units Vary by Exchange (MCX, NYMEX, LME, CBOT)
Commodity units are not globally uniform. Each exchange enforces its own quoting conventions, lot sizes, and contract units based on regional practices, delivery standards, and historical precedent.
These variations directly affect trade sizing, margin calculations, and hedging equivalency.
A trader operating across markets must navigate these differences with precision to avoid mismatched exposures or pricing errors.
Why Exchanges Use Different Units
Global commodity exchanges developed unit standards independently, shaped by domestic logistics, market participants, and legacy systems.
For example, while gold is globally accepted in troy ounces, some regions quote contracts in kilograms.
These unit distinctions aren’t cosmetic, they’re structural, affecting tick value, notional exposure, and risk management.
Exchange-specific units also influence pricing granularity and liquidity. A unit that suits one market’s physical delivery infrastructure may be unsuitable for another. Hence, understanding the unit context per exchange is crucial before initiating any position.
Gold: MCX vs COMEX vs LME
- MCX: Gold is quoted in kilograms, with the standard lot size at 1 kg.
- COMEX: Quoted in troy ounces, with standard contracts sized at 100 oz.
- LME: Focuses on physically settled, industrial-grade bullion, typically quoted per ounce or gram, based on contract type.
A trader moving from COMEX to MCX must adjust for not only unit conversion (oz to kg) but also price basis (USD/oz vs INR/kg), leading to significant hedging and settlement recalibration.
Crude Oil: MCX vs NYMEX
- MCX: Quoted per barrel, with a 100-barrel lot size.
- NYMEX: Also per barrel, but standard contracts cover 1,000 barrels.
Though the unit (barrel) is consistent, the lot size differs by 10x, significantly altering the exposure. This is critical when mirroring hedges or calculating delta equivalents in options and spreads.
Soybean: NCDEX vs CBOT
- NCDEX (India): Quoted and settled in metric tons, typically 10 MT per lot.
- CBOT (U.S.): Uses bushels, with 5,000 bushels per contract.
Since one metric ton of soybean is approximately 36.7 bushels, a direct conversion must be calculated before initiating any hedge. A 1-lot CBOT position does not match a 1-lot NCDEX position without conversion and scaling.
Contract Types by Unit Size
Mini vs Standard vs Micro Contracts
Exchanges also offer derivative contract tiers:
- Standard contracts provide full exposure (e.g., 100 oz gold).
- Mini contracts offer reduced exposure (e.g., 10 oz or 250g).
- Micro contracts further reduce size, enabling retail participation (e.g., 1 oz or 100g).
While the units remain constant (e.g., oz or kg), lot size and margin requirements scale down. These variations are ideal for strategy testing, portfolio fine-tuning, or incremental hedging.
Table: Commodity → Exchange → Unit → Lot Size
| Commodity | Exchange | Quoted Unit | Standard Lot Size |
| Gold | MCX | Kilogram | 1 kg |
| Gold | COMEX | Troy Ounce | 100 oz |
| Crude Oil | MCX | Barrel | 100 barrels |
| Crude Oil | NYMEX | Barrel | 1,000 barrels |
| Soybean | NCDEX | Metric Ton | 10 MT |
| Soybean | CBOT | Bushel | 5,000 bushels |
| Silver | MCX | Kilogram | 30 kg |
| Silver | COMEX | Troy Ounce | 5,000 oz |
| Copper | LME | Metric Ton | 25 MT |
| Copper | MCX | Metric Ton | 1 MT |
Commodity Unit Conversions You Must Know
Commodity trading conversions determine real-time trade feasibility, pricing accuracy, and margin calculations.
Traders working across geographies or exchanges frequently convert between metric and imperial units to align positions, hedge correctly, and evaluate exposure in native terms.
A mistake in conversion, especially in leveraged environments, can result in critical losses or overexposure.
Common Conversion Formulas
Unit conversions allow traders to bridge gaps between quoting conventions and trading infrastructure. Below are essential formulas used across energy, metals, and agricultural markets:
- 1 barrel (oil) = 158.987 liters
- 1 metric ton (MT) = 1,000 kilograms
- 1 short ton (US) = 907.18474 kilograms
- 1 troy ounce = 31.1035 grams
- 1 bushel (wheat) = 27.2155 kilograms
- 1 gallon (US) = 3.78541 liters
Each formula plays a role in converting exchange-quoted figures into operational, deliverable volumes or values, especially in multi-leg arbitrage or inter-exchange positions.
Metric vs Imperial Units
Global trading demands fluency in both metric and imperial systems.
- The metric system dominates Asian and European exchanges (kilograms, metric tons, liters).
- The imperial system is used in North American markets (pounds, bushels, gallons).
CBOT grain contracts quote in bushels, while NCDEX quotes the same in metric tons. Similarly, U.S. crude is dealt in barrels, whereas energy imports in Asia may refer to liters or metric tons depending on quality and density.
Understanding both systems isn’t optional, it’s foundational to arbitrage, hedging, and settlement.
Calculation Examples: Real Trades
Example 1 – Crude Oil Import Hedge
A trader in India buys a 100-barrel MCX crude oil futures contract. To evaluate the physical exposure in liters:
→ 100 barrels × 158.987 = 15,898.7 liters
Example 2 – Gold Price Comparison
Gold is quoted as ₹ per 10 grams (India) and USD per troy ounce (COMEX).
To compare:
→ 1 oz = 31.1035 grams → divide COMEX price by 3.11035 to get price per 10g (approx.)
Example 3 – Soybean Cross-Market Hedge
1 MT of soybean = ~36.74 bushels. To hedge a 10 MT NCDEX position using CBOT contracts:
→ 10 × 36.74 = 367.4 bushels → round to 1 CBOT lot (5,000 bushels) or scale accordingly.
Table: Top 15 Unit Conversions (Quick Reference)
| From → To | Conversion Rate |
| 1 barrel → liters | 158.987 liters |
| 1 liter → barrels | 0.00629 barrels |
| 1 metric ton → kg | 1,000 kg |
| 1 kg → metric ton | 0.001 MT |
| 1 short ton → kg | 907.18474 kg |
| 1 troy oz → grams | 31.1035 grams |
| 1 gram → troy oz | 0.03215 oz |
| 1 bushel (wheat) → kg | 27.2155 kg |
| 1 bushel (corn) → kg | 25.4012 kg |
| 1 gallon (US) → liters | 3.78541 liters |
| 1 liter → gallons (US) | 0.26417 gallons |
| 1 MT (coal) → short ton | 1.10231 short tons |
| 1 ounce → grams | 28.3495 grams |
| 1 kg → pounds | 2.20462 pounds |
| 1 pound → kg | 0.453592 kg |
FAQs on Commodity Trading Units
Q1. What is the unit of gold in commodity trading?
Gold is typically quoted in troy ounces on international exchanges like COMEX, while Indian exchanges such as MCX use kilograms. For retail pricing in India, gold is also shown per 10 grams, but this is not used in futures contracts.
Q2. How many barrels in a crude oil lot?
The standard lot size for crude oil varies by exchange:
- MCX: 100 barrels per lot
- NYMEX: 1,000 barrels per lot
Always check the contract specification before trading, as lot sizes also vary across mini and micro contracts.
Q3. Are MCX lot sizes different from NYMEX?
Yes. MCX contracts are typically smaller and better suited for regional traders or smaller capital bases. For example:
- Gold: MCX – 1 kg | COMEX – 100 troy oz
- Crude Oil: MCX – 100 barrels | NYMEX – 1,000 barrels
This affects notional exposure, margin requirements, and tick value.
Q4. What is the difference between an ounce and a troy ounce?
A troy ounce (31.1035 g) is the standard used for precious metals. A standard ounce (avoirdupois) equals 28.3495 g. Using the wrong measurement can lead to mispricing in settlement and arbitrage trades.
Q5. Can beginners trade smaller lot sizes?
Yes. Most exchanges offer mini and micro contracts.
For example:
- Gold Petal (MCX): 1 gram
- Crude Mini (MCX): 10 barrels
These lower-sized lots allow new traders to participate with less capital while gaining exposure to actual price movements.
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