1. Who Benefits from dealing in Commodity futures and how ?

Commodity futures are beneficial to a large section of the society, be it farmer, businessmen, industrialist, importer, exporter, working class etc.

If you are an investor, commoditites futures represent a good form of investment for the following reasons:

DIVERSIFICATION :

The returns from commodities market are free from the direct influence of the equity or the debt market, which means they are capable of being used as effective hedging instrumens providing better diversification

LESS MANIPULATIONS:

Commodities markets as they are governed by the International Price movements are less prone to rigging or price manipulations by individuals.

HIGH LEVERAGE :

The margins in the commodity futures market are less than the F&O (Futures and option) section of the equity market.

2.  What are Commodities Futures ?

Commodities Futures are contracts to buy specific quantity of a particular commodity at a future date. It is similar to the Index futures and Stock futures but the underlying happens to be commodities instead of Stocks and indices

3. Commodity Futures are recently introduced in India. Aren't they ?

Commodity Futures market has been in existence in India for Centuries. The Govt.of India Banned futures trading in certain commodities in 70s. However Trading in commodity futures has been permitted again by the government in order to help the Commodity producers, traders and investors. World-wide, commmodity exchanges orginated before the other financial exchanges. Infact most of the derivatives instruments had their birth in commodity exchanges.

4. What are the Major Commodity Exchanges ?

The Govt.of India permitted establishment of National-level multi commodity Exchanges in the year 2002 and accordingly 3 exchanges have come into picture, which are :

- Multi-Commodity Exchange of India Ltd, Mumbai (MCX)

- National Commodity and Derivatives Exchange of India, Mumbai (NCDEX)

- National Multi Commodity Exchange, Ahmedabad (NMCE)

5. What are the working hours for the Commodity Exchanges ?

Commodity Exchanges (MCX and NCDEX) function from 10.00 AM to 11.55 PM with a break of 30 Minutes between 5.00 PM to 5.30 PM. However some specific commodities with strong international price linkages such as Gold, Silver, Soy Oil, Crude Oil etc., are allowed to be traded after 8.00 PM.

6. Who Regulates the Commodity exchanges ?

Just as SEBI regulates the stock exchanges, Commodity exchanges are regulated by Forwards Market Commission (FMC); FMC is under the purview of Ministry of Food, Agriculture and Public Distribution.

7. How Risky are these markets compared to Stock & Bond markets ?

Commodity prices are generally less volatile than the stocks and this has been statiscally proven. Therefore it's relatively safer to trade in commodities.

Also the regulatory authorities ensure through continuous vigil that the commodity prices are market-driven and free from manipulations. However all investments are subject to market risk and depends on the individual.

8. What are the major Commodities traded on MCX & NCDEX ?