Agricultural marketing

Commodities for Futures Trading 
Commodities permissible under futures trading must satisfy the following 
conditions. 
1. Plentiful supply of the commodity.
2. Must be storable.
3. Commodity should be homogeneous.
4. Commodity should have a large demand.
5. Supply of the commodity should not be controlled by a few large firms.
6. The price of a commodity should be liable to fluctuate over a wide range.
Forward Markets  
A market in which the purchase and sale of a commodity takes place at time ‘t’ 
but the exchange of the commodity takes place on some specified date in future i.e. t+1.
Some times even on the specified date in the future, (t+1) there may not be any 
exchange of the commodity. Instead, the differences in the purchase and sale price are 
paid or taken.
Services Rendered by a Forward Market.  
1. Reduces price fluctuations so that the margin of profit may be small. 
2. Ensures an even flow of goods, avoiding gluts in the peak season, and shortages 
in the slack seasons.
3. It brings about an integration of the price structure of commodities at different 
points of time.
4. Facilitates large purchases and sales at a short notice.
5. Brings coordination of the current and future expectations by rotating in the light 
of changing supply – demand situation. 
Dangers of Forward Market  

---

1. Forward market opens out the way for a large number of persons with insufficient 
means, inadequate experience and information to enter into commitments which 
may be beyond their means. In such conditions market gets demoralized.
2. It enable unscrupulous speculators, with little interest in the actual supply of and 
demand for, a particular commodity, to corner the supplies and organize bear 
raids and bull raids on the market in the hope of making easy money for 
themselves. This results in violent fluctuations in prices.