Volatility in the prices of the underlying commodities. Large numbers of buyers and sellers with diverse risk profiles hedgers, speculators and arbitrageurs. The underlying physical commodities to be fungible, i.

Commodity Futures contracts always trade on an organized exchange, e. NCDEX, MCX, etc in India and NYMEX, LME, COMEX etc. Commodity Futures contracts are highly standardized with the quality, quantity, and delivery date, being predetermined.

Commodity Futures exchanges use clearing houses to guarantee that the terms of the futures contract are fulfilled. The Clearing House guarantees that the contract will be fulfilled, eliminating the risk of any default by the other party.

Commodities Price - Commodity Market, Stock, News, Spot Market Prices, Gold Price/Rate in India, Crude Oil, Silver, MCX

Commodity Futures traders do not have to put up the entire value of a contract. This facilitates taking of leveraged positions. Futures markets are closely regulated by government agencies, e.

Beginners Guide to Commodities Trading in India

Forward Markets Commission FMC in India, Commodity Futures Trading Commission in CFTC USA, etc. This ensures fair practices in these markets.

Actual delivery of the commodity can be made or taken on expiry of the contract. Physical delivery requires the member to provide the exchange with prior delivery information and completion of all the delivery related formalities as specified by the exchange. In order to understand the commodity market participants like hedgers, speculators and arbitrageurs, it is essential to first understand all the features, terms and conditions of the commodity futures contract.

In the next chapter we will learn about the various commodity market participants like hedgers, speculators and arbitrageurs. Login To Trade Activate An Account Open An Account.

Benefits of Investing in Commodities. What are Commodities Futures Contracts. A commodity futures contract is a commitment to make or accept delivery of a specified quantity and quality of a commodity during a specific month in the future date at a price agreed upon when the commitment is made.

What is a Commodity Futures Contract with Kotak Commodities

Commodities traded in the commodity exchanges are required to be delivered at the contracted price, ignoring all the changes in the market prices. An effective and efficient market for trading in commodities futures requires: Features of commodity futures 1.

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