Futures Market Helps All

Futures contracts perform two important functions:

• Price Discovery
• Price Risk Management

Farmers

• Efficient Price Discovery/Forecast made by the exchange will enable farmers decide cropping pattern and investment on inputs.
• Price Stability resulting from equilibrium in supply and demand for a commodity would be possible through exchanges.
• Get an extensive market opened for them.
• Get opportunity to trade, knowing the national and international trends and standards.
• Can sell the commodity to the customer without any agents.
• Can decide the market even before harvest.
• Get an opportunity to gain profit by spending only a small percentage of the actual commodity price.
• There is an opportunity to keep the commodity in the warehouse and use the warehouse receipt to deal with financial needs, as it is an endorsable document. Can avoid deliberate decrease in price in the name of quality.
• Farmers can trade by asking the help of the experts in trading organizations even if they are computer illiterate.

Traders

• Can trade by spending only the margin amount.
• Can sell the commodities that he buys from the ready market and can rescue himself from the loss happening from price fall.
• For those who have kept their commodity in the Central Warehouse, loans are available on the basis of the stock. The benefit is that you can keep the commodity somewhere without blocking the working capital in the stock.

Consumer, Industrialist & Exporters

• Can be sure that the commodity is available when they require it.
• Can calculate the price since it is predetermined and can arrange everything according to that.
• Can buy goods without agents.
• Can buy them even while sitting in their office.
• Can be assured the quality of the good.
• Commodities can be purchased with only margin amount instead of giving the whole price.