A commodity futures contract is an agreement to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future. Buyers use such contracts to avoid the risks associated with the price fluctuations of a futures' underlying product or raw material. A commodity market is a market that trades in primary economic sector rather than manufactured products. They are classified into Agri Products ,Non Agri Products, Base Metals, Bullions and Energy .
Commodity exchanges actually serve a vital role to the economy and it is unlikely we would have had as much economic growth in the last 100 years without the commodity exchanges.
The purpose of commodity exchanges is to provide a centralized marketplace where commodity producers (commercials) can sell their commodities to those who wish to use them for manufacturing or consumption. The beauty of a commodity futures exchange is that someone like a corn farmer can lock in a price for his crops months before they are even harvested. This process increases business survival among farmers and the exchanges always make sure there is a buyer for every seller, provided their prices meet
In India We can trade in NCDEX and NMCE for Agri Products and in MCX for Non Agri Products Base Metals, Bullions and Energy . Commodity futures exchanges serve a very important role in establishing global benchmark prices for crucial commodities. The exchanges are crucial for both producers and consumers of commodities.