📊 NISM Series XVChapter 11 of 15⚖ 5 marks weightageCase-Based ✓
Ch.11: Fundamental Analysis of Commodities
Practice questions for NISM-Series-XV: Research Analyst Certification Examination
(mandated by SEBI under the Research Analysts Regulations, 2014).
Chapter 11 carries 5 out of 100 marks
in the final examination. The exam has 80 MCQs + 5 case-based sets, 120-minute duration,
60% passing score, and −0.25 negative marking per wrong answer.
30
MCQ
1
Case Sets
34
Total Qs
5
Exam Marks
60%
Pass Score
−0.25
Neg. Marking
What You Will Learn in This Chapter
Understand supply-demand dynamics for major commodities
Know how macroeconomic factors and currency affect commodity prices
Understand CBOT reports, inventory data and commodity cycles
Key Terms:commodityspot pricefuturescontangobackwardationCBOTsupply demanddollar index
Multiple Choice Questions (30)
Q1MCQEasySupply Side Factors
Which of the following is NOT listed as a key driver of supply in commodity markets?
AWeather & Natural Disasters
BGeopolitical Events
✓Consumer Preferences & Lifestyle
DProduction Levels
💡 Consumer Preferences & Lifestyle is identified as a demand-side factor, not a supply-side factor.
Q2MCQEasySupply Demand Dynamics
The fundamental analysis of commodities is largely dependent on which of the following?
ACompany balance sheet and profit & loss account.
✓Supply and demand dynamics of the commodity.
CPerformance of the equity market.
DIndustry and economy studies specific to a company.
💡 The text states, 'The fundamental analysis of commodities is largely dependent on the supply and demand dynamics of a particular commodity whereas in equity market, it is largely the study of balance sheet, profit and loss account as well as cash flow statement and performance of the company, industry and economy.'
Q3MCQMediumInventory, Production & Consumption
High inventory levels of a commodity typically signal what market condition and price pressure?
AScarcity and potential price increases.
✓Oversupply and downward pressure on prices.
CBalanced supply and demand, leading to stable prices.
DIncreased production capacity and upward price pressure.
💡 The text explains, 'High inventory levels often signal oversupply, leading to downward pressure on prices'.
Q4MCQMediumDollar Index
The U.S. Dollar Index measures the strength of the U.S. Dollar against a basket of how many major currencies?
AThree
BFive
✓Six
DTen
💡 The dollar index is a measure of strength of U.S. Dollar against six major currencies.
Q5MCQMediumCurrency Impact on Prices
When the U.S. dollar strengthens against other currencies, what is the typical impact on commodity prices for buyers using non-dollar currencies?
ACommodities become cheaper, increasing demand and driving prices upward.
✓Commodities become more expensive, reducing global demand and putting downward pressure on prices.
CThere is no direct impact on commodity prices as they are globally traded.
DCommodity prices become more volatile without a clear directional trend.
💡 When the dollar strengthens against other currencies, commodities typically become more expensive for buyers using non-dollar currencies, which often reduces global demand and puts downward pressure on commodity prices.
Q6MCQEasyDemand Side Factors
A global economic recession would most likely have what effect on the demand for energy, metals, and food commodities?
AIncrease demand for energy, metals, and food.
✓Reduce demand for energy, metals, and food.
CShift demand towards renewable energy.
DIncrease demand for substitutes and alternatives.
💡 The text states that 'recessions reduce the demand' for energy, metals, and food.
Q7MCQEasyDemand Side Factors
A recession typically has what effect on the demand for commodities like energy, metals, and food?
AIncreases demand
✓Reduces demand
CHas no significant impact
DShifts demand to substitutes
💡 The text states that 'recessions reduce the demand' for energy, metals, and food.
Q8MCQEasyCurrency Impact
As a convention, which currency has established itself as the most preferred internationally convertible currency for quoting and trading commodities?
AEuro
BJapanese Yen
✓US Dollar
DUK Pound Sterling
💡 The text states, 'US Dollar, right from the post world war period, has established itself as the most preferred internationally convertible currency... Therefore, commodities’ trade across the world, uses US Dollar, then followed by Euro, as the two most preferred currencies to quote and trade in the commodities.'
Q9MCQEasyInternational-Domestic Correlation
According to the text, which commodity exchange is the benchmark for trading of agricultural commodities?
ACOMEX
BNYMEX
CLME
✓Chicago Board of Trade (CBOT)
💡 The text states, 'Chicago Board of Trade (CBOT) is the benchmark for trading of agricultural commodities.'
Q10MCQMediumMacroeconomic Indicators
According to the text, which macroeconomic indicator typically pushes investors toward commodities, especially precious metals like gold, as a hedge?
ALow interest rates
BDeflation
✓Rising inflation
DStrong GDP growth
💡 Rising inflation typically pushes investors toward commodities, especially precious metals like gold, which act as a hedge.
Q11MCQMediumMacroeconomic Indicators
How does strong economic growth (GDP growth) generally affect the demand for commodities according to the text?
AIt reduces industrial production and consumer spending, decreasing demand.
✓It boosts industrial production and consumer spending, increasing demand.
CIt causes investors to shift away from commodities due to higher risk.
DIt primarily affects agricultural commodity prices, leaving others unchanged.
💡 The text states: 'Strong economic growth boosts industrial production and consumer spending, thereby increasing demand for commodities like energy, metals, and agricultural products.'
Q12MCQEasySupply Side Factors
Which of the following is NOT listed as a key driver of supply in commodity markets?
ACrop yields and mining output.
BGovernment policies like subsidies and tariffs.
✓Global economic growth.
DWeather and natural disasters.
💡 Global economic growth is listed under Demand Side Factors, while the others are listed under Supply Side Factors.
Q13MCQEasyInternational and Domestic Markets
Which global exchange is identified as the benchmark for trading agricultural commodities?
ACOMEX
BNYMEX
CLME
✓Chicago Board of Trade (CBOT)
💡 The text explicitly states: 'Chicago Board of Trade (CBOT) is the benchmark for trading of agricultural commodities'.
Q14MCQMediumDollar Index Impact
When the U.S. dollar strengthens against other currencies, what is the typical impact on commodity prices in global markets?
AIt generally puts upward pressure on commodity prices.
BIt makes commodities cheaper for buyers using non-dollar currencies.
✓It often reduces global demand, putting downward pressure on prices.
DIt has no significant impact on commodity prices.
💡 The text states, 'When the dollar strengthens against other currencies, commodities typically become more expensive for buyers using non-dollar currencies. This often reduces global demand and puts downward pressure on commodity prices.'
Q15MCQMediumCurrency and Dollar Index
According to the text, what is the primary reason the US Dollar has assumed importance as an international reserve currency for commodity trade?
AIts direct correlation with the price of gold.
BIts historical stability compared to other major currencies.
✓Its preference by central banks of many countries.
DIts exclusive use in all cross-border trade settlements.
💡 The text states that the US Dollar 'has assumed the importance as international reserve currency due to the preference by central banks of many countries.'
Q16MCQMediumAgricultural Reports
What type of information do crop reports provide that is critical for agricultural commodity fundamental analysis?
AGlobal trade balances and geopolitical tensions.
✓Acreage, planting progress, yield estimates, and inventory status.
CInterest rate policies and consumer sentiment.
DIndustrial production figures and energy consumption trends.
💡 Crop reports provide detailed insights into acreage, planting progress, yield estimates, production levels, and inventory status of key crops.
Q17MCQHardDollar Index Components
The dollar index measures the strength of the U.S. Dollar against six major currencies. Which of the following is NOT one of these six currencies, according to the text?
AEuro
BCanadian Dollar
✓Chinese Yuan
DJapanese Yen
💡 The text lists the six major currencies as 'Euro, Japanese Yen, Pound Sterling, Canadian Dollar, Swedish Krona and Swiss Franc.' Chinese Yuan is not included in this list.
Q18MCQHardInternational and Domestic Markets
While international commodity benchmarks like NYMEX for crude oil heavily influence domestic prices in importing countries, which of the following factors could cause domestic prices to diverge from these international benchmarks?
BA strengthening U.S. dollar making imports cheaper.
✓Strong local demand, government interventions, or seasonal supply variations.
DIncreased production levels by major international exporters.
💡 The text states that 'strong local demand, government interventions, and seasonal supply variations can sometimes cause domestic prices to diverge from international benchmarks.'
Q19MCQEasyFundamental Analysis Introduction
The fundamental analysis of commodities is largely dependent on which of the following?
AStudy of balance sheet and cash flow statements.
BPerformance of the company, industry, and economy.
✓Supply and demand dynamics of a particular commodity.
DTechnical chart patterns and trading volumes.
💡 The text explicitly states: 'The fundamental analysis of commodities is largely dependent on the supply and demand dynamics of a particular commodity'.
Q20MCQMediumMacroeconomic Indicators
According to the text, how does rising inflation typically influence investors' behavior regarding commodities, particularly precious metals?
AIt encourages investors to sell commodities to preserve capital.
✓It pushes investors toward commodities, especially precious metals, which act as a hedge.
CIt has no direct impact on commodity investment decisions.
DIt leads to a decrease in the cost of production and transportation, making commodities less attractive.
💡 The text states: 'rising inflation typically pushes investors toward commodities, especially precious metals like gold, which act as a hedge.'
Q21MCQEasyFundamental Analysis Focus
What is the primary focus of fundamental analysis in commodity markets, as stated in the text?
AStudy of balance sheet and profit and loss accounts of companies.
BPerformance of the company, industry, and economy.
✓Supply and demand dynamics of a particular commodity.
DTechnical chart patterns and trading volumes.
💡 The fundamental analysis of commodities is largely dependent on the supply and demand dynamics of a particular commodity.
Q22MCQHardCurrency and Dollar Index
When the U.S. dollar strengthens against other currencies, what is the typical impact on dollar-denominated commodity prices and global demand?
ACommodities become cheaper for non-dollar buyers, increasing global demand and driving prices upward.
✓Commodities become more expensive for non-dollar buyers, reducing global demand and putting downward pressure on prices.
CCommodities' value remains unaffected, but global demand increases due to a stronger dollar.
DCommodities become cheaper for non-dollar buyers, but global demand decreases due to market uncertainty.
💡 The text states: 'When the dollar strengthens against other currencies, commodities typically become more expensive for buyers using non-dollar currencies. This often reduces global demand and puts downward pressure on commodity prices.'
Q23MCQHardCurrency and Exporters
A country that is a major exporter of a dollar-denominated commodity would likely benefit from which of the following scenarios when converting revenues back to its home currency?
AA strengthening U.S. dollar.
✓A weakening domestic currency against the U.S. dollar.
CA decrease in global commodity prices.
DAn increase in its domestic interest rates.
💡 Exporters of commodities may benefit when their local currency weakens, as dollar revenues lead to more home currency revenues, when converted back.
Q24MCQMediumDemand Side Factors
A global shift towards renewable energy, as mentioned in the text, would primarily influence commodity demand through which of the following factors?
AGlobal Economic Growth
BIndustrial & Infrastructure Development
✓Consumer Preferences & Lifestyle
DPopulation Growth & Urbanization
💡 The text states, 'Consumer Preferences & Lifestyle – Shift toward renewable energy increases demand for lithium and silver.'
Q25MCQHardCountry Specific Factors (Supply)
The text highlights country-specific factors influencing commodity supply. Which of the following is explicitly mentioned as affecting the supply of copper from Chile?
AOnly geopolitical tensions in the Middle East.
✓Weather aberrations and labour strikes.
CIncreased technological advancements in mining.
DShifts in consumer preferences for substitutes.
💡 The text states, 'For ex., Copper is largely produced in Chile, a South American Country, which is largely affected by weather aberrations, labour strike and many more, that affects supply of copper to the world market.'
Q26MCQEasyGlobal Commodity Exchanges
Which of the following is mentioned as a global benchmark setting organization for trading in base metals?
AChicago Board of Trade (CBOT)
BCOMEX
CNew York Mercantile Exchange (NYMEX)
✓London Metal Exchange (LME)
💡 The London Metal Exchange (LME) is listed as a global benchmark setting organization for base metals.
Q27MCQMediumCrop Reports
According to the text, how does a higher-than-expected production report for an agricultural commodity typically affect its prices?
AIt generally leads to price increases.
✓It generally leads to price declines.
CIt causes price volatility but no clear direction.
DIt has no direct impact, as demand is the sole driver.
💡 The text states, 'A higher-than-expected production report generally leads to price declines, while lower output projections can drive prices upward.'
Q28MCQHardInternational and Domestic Markets
While domestic commodity markets generally correlate with international benchmarks, which of the following factors can cause domestic prices to diverge from international trends?
AA strengthening domestic currency against the U.S. dollar.
✓Strong local demand, government interventions, and seasonal supply variations.
CA decrease in global trade sanctions and tariffs.
DIncreased reliance on imported commodities.
💡 The text notes: 'On the other hand, strong local demand, government interventions, and seasonal supply variations can sometimes cause domestic prices to diverge from international benchmarks.'
Q29MCQMediumProduction Trends
An increase in oil output by OPEC members, as described in the text, typically has what effect on global crude prices?
AIt exerts upward pressure on prices.
✓It exerts downward pressure on prices.
CIt stabilizes prices with no significant change.
DIt only affects regional prices, not global.
💡 The text states, 'For instance, an increase in oil output by OPEC members typically exerts downward pressure on global crude prices.'
Q30MCQEasySupply Side Factors
Which of the following is considered a key driver of supply in commodity markets?
AConsumer Preferences & Lifestyle
BGlobal Economic Growth
✓Geopolitical Events
DPopulation Growth & Urbanization
💡 Geopolitical Events, such as wars, sanctions, trade restrictions, and OPEC decisions, are listed as key drivers of supply in commodity markets.
Case-Based Questions (1 sets)
Case 1Case-BasedFundamental Analysis of Commodities: Supply, Demand, Currency, and Macro Factors
Global economic growth projections for the upcoming year have been revised downwards by major international bodies, signaling a potential slowdown in industrial activity across key manufacturing hubs in Asia and Europe. This has naturally tempered demand expectations for industrial raw materials. Simultaneously, the U.S. Dollar Index (DXY) has shown a consistent strengthening trend over the past quarter, currently trading at a multi-year high, driven by expectations of higher interest rates from the Federal Reserve and safe-haven flows amidst global uncertainty. Adding to market complexities, a significant labor strike has erupted in Chile, a major copper-producing nation, disrupting mining operations and port logistics, leading to concerns about potential supply shortages in the near term. Furthermore, recent data from the International Energy Agency indicates a steady increase in global crude oil inventories, primarily due to higher-than-anticipated output from non-OPEC+ producers, while demand growth forecasts have been tempered by the weaker economic outlook. A research analyst at 'Global Insights Corp.' is tasked with assessing the potential impact of these converging factors on the prices of various commodities, including industrial metals and energy.
Hard Sub-question 1
The labor strike in Chile, a major copper-producing nation, primarily affects which fundamental aspect of the copper market?
AGlobal demand for copper due to reduced industrial activity.
BThe cost of substitutes for copper, making them more attractive.
✓The supply side, potentially leading to a decrease in global copper availability.
DThe purchasing power of consumers in emerging markets.
💡 Labor strikes in major producing nations directly disrupt production and logistics, thereby reducing the supply of the commodity to the global market, as stated in the text regarding Chile and copper.
Medium Sub-question 2
Considering the downward revision in global economic growth projections and the steady increase in crude oil inventories, what is the most probable outcome for international crude oil prices?
APrices are likely to rise due to increased speculative buying.
BPrices are likely to remain stable due to balanced supply and demand.
✓Prices are likely to fall due to weakening demand and oversupply concerns.
DPrices will be primarily driven by geopolitical events, negating economic factors.
💡 Weakening global economic growth reduces demand for energy, while increasing inventories signal an oversupply. Both factors contribute to downward pressure on crude oil prices.
Medium Sub-question 3
Given the strengthening U.S. Dollar Index (DXY), what would be its likely immediate impact on the international prices of dollar-denominated commodities for non-dollar buyers?
ACommodities would become cheaper, increasing demand.
✓Commodities would become more expensive, reducing demand.
CCommodity prices would remain unaffected as the DXY only impacts forex markets.
DThis would lead to a direct increase in commodity production costs.
💡 When the dollar strengthens, commodities priced in dollars become more expensive for buyers using other currencies, which typically reduces demand and puts downward pressure on prices.
Easy Sub-question 4
As a research analyst, what is the primary objective when analyzing these converging factors in the commodity market?
ATo predict short-term currency fluctuations only.
BTo identify opportunities for arbitrage between different commodity exchanges.
✓To anticipate shifts in demand, pricing trends, and overall market sentiment for informed decision-making.
DTo advise on the best time to invest in equity markets.
💡 The primary objective of a research analyst in commodity markets is to understand the interplay of various factors to anticipate market movements, assess risks, and enable informed strategic decisions for traders and investors.
About this content: These practice questions are based on the
NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026)
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Fundamental Analysis of Commodities with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
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