Commodity markets have enabled better buying/selling of commodities by having a central market infrastructure where market participants from different corners of a country or whole world can place bids to sell/buy goods and their orders are fulfilled instantly based on settlement method agreed by the parties. They provide price determination and price risk management facility to its participants.

Manufacturers like Farmers don’t have to worry where or to whom to sell their output, they can sell on spot price at the exchange or agree on a future price in form of a futures contract – which gives them the right to sell their output at an agreed price on the set expiry date in the contract.