A commodity market facilitates trading in various commodities such as spot or a derivatives market. In spot market, commodities are bought and sold for immediate delivery, whereas in derivatives market, various financial instruments based on commodities are traded. These financial instruments such as 'futures' are traded in exchanges.
Commodity Futures are contracts to buy/sell 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.
Futures prices evolve from the interaction of bids and offers emanating from all over the country – which converge in the trading floor or the trading engine. The bid and offer prices are based on the expectations of prices on the maturity date.
A hedge is an investment to reduce the risk of adverse price movements in an asset.
Risk management technique that mixes a wide variety of investments.
Protect Your Portfolio Against Inflation And Deflation
Return on investment, or ROI, is the most common profitability ratio.
Risk with such a position is low