Why Commodities?

Given the fact that nearly two in three Indians are dependent on agriculture, it can be argued that this is a commodity-based economy even if the share of agriculture in our GDP is today below 20%. From a well-articulated forethought it is revealed that the agricultural commodities market is pretty expected to touch 526 million tonnes which will be worth $217 billion by 2020 at current prices.

The commodities market plays the role of a mediator between buyers and sellers to arrive at a future price of underlying commodity. The market also facilitates decisions related to storage and consumption of commodities. In the process, such transactions make the market more liquid for both the parties i.e. the buyers and sellers being involved. Over the years, the development of commodities trading helped investors hedging their risk, take speculative positions and exploit arbitrage opportunities in the market.