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Commodity future:
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 time in future at a certain price agreed at the time of entering into the contract on the commodity futures exchange.
What is commodity?
Commodities are raw materials used to create various products. Commodities include agricultural products such as grains, oilseeds, vegetable oils, pulses and also meats and livestock; energy products such as crude oil and gasoline; and metals such as gold, silver, aluminum and mild steel ingots. The commodity market is driven by demand and supply factors and inventory, when it comes to perishable commodities such as agricultural products and high demand products such as crude oil. Like any market, the demand-supply equation influences the prices. Variables like weather, social changes, government policies and global factors influence the balance.
