Commodities futures, or Futures Contracts, are an agreement to buy or sell a commodity at a specific date in the future at a specific price. Just like the price of bananas at the grocery store, the prices of commodities can change on a weekly or even daily basis. If the price goes up, the buyer of the futures contract makes money, because he gets the product at the lower, agreed-upon price and can now sell it at the higher, market price. If the price goes down, the seller makes money, because he can buy the commodity at the lower market price, and sell it to the buyer at the higher, agreed-upon price. Commodity Futures are based on physical commodities that include items such as gold, silver, other precious metals, and grains. Various types of food items, such as corn or pork bellies, are also considered to be commodities. Commodity futures are based on the perceived worth of the goods today and at some future point in time.

Salient Features of a "Commodity Futures Contract">

A commodity futures contract is a tradable standardized contract, the terms of which are set in advance by the commodity exchange organizing abinitio trading in it. The futures contract is for a specified variety of a commodity, known as the "basis", though quite a few other similar varieties, both inferior and superior, are allowed to be deliverable or tenderable for delivery against the specified futures contract.

What kind of statutory framework for regulating commodity futures exists in India?

Commodity futures contracts and the commodity exchanges organizing trading in such contracts are regulated by the Government of India under the Forward Contracts (Regulation) Act, 1952 (FCRA or the Act), and the Rules framed thereunder. The
Nodal agency for such regulation is the Forward Markets Commission (FMC), situated at Mumbai, which functions under the aegis of the Ministry of Consumer Affairs, Food & Public Distribution of the Central Government.

Recommended Resources On Commodity Future

Options, Futures, and Other Derivatives (Prentice Hall Series in Finance) by JOHN C HULL

Options, Futures, and Other Derivatives: AND Student Solutions Manual for Options, Futures, and Other Derivatives by JOHN C HULL

An Introduction to Commodity Futures and Options
By Nick Battley

Modern Commodity Future Trading
By Gerald Gold

The Commodity Futures Market Guide
By Stanley Kroll, Irwin Shishko

Useful Links

http://www.mcxindia.com/
http://www.ncdex.com/
http://www.nmce.com/
http://www.nymex.com/
http://www.agmarknet.nic.in/
http://www.gold.org/
http://www.commoditieslinks.com/
http://www.fceikochi.com/pages/subpagesfaq_contents.html

Join The Discussion on "How To buy Commodities Futures Online?"

Find out what other readers have to say in our Member's Only Forum Area on today's topic. Share , ask , connect and enjoy!