A Commodity Futures Contract is a contractual agreement between two parties to buy or sell a specified quantity and quality of Commodity at a certain price agreed at the time of entering into the contract on the Commodity Futures Exchange. As on date, the futures are available on several commodities including Agro Products, Metals, Bullions and Energy Products.

The Commodity Futures Trading is presently being organized by some institutions, for which license has been granted by Forward Markets Commission (FMC), which comes under the Ministry of Consumer Affairs Food and Public Distribution. The leading institutions which are presently offering Commodity Futures Trading facility in India are Multi Commodity Exchange of India Limited (MCX) and National Commodities and Derivatives Exchange Limited (NCDEX). The group Share India is having a corporate membership of both of these institutions.

Besides others, trading in Commodity Futures offers following benefits:

  Hedging-price risk management by risk mitigation.

  Speculation-take advantage of favorable price movements.

  Leverage - pay low margin to enjoy large exposure.

  Liquidity - ease of entry and exit of market.

  Price discovery - for taking farming and business decisions.

  Price stabilization along with balancing demand and supply position.

  Facilitates integrated price structure.

  Flexibility, certainty and transparency in purchasing commodities      facilitate bank financing.