Is it correct that the futures market leads to the rise in prices of essential commodities?
The share of agriculture commodities including essential commodities in the total commodity futures trade turnover is about 25%. The share of essential commodities in the over all futures trading is about 8%.The volume of trade in bullion (gold and silver) has about 38% share, energy products has a share of 12% and other metals and commodities like aluminium, zinc, tin, copper, lead, sponge iron, steel, polymer etc. have a share of about of 25 % in the total turnover. The level of prices of commodities is determined largely by a variety of factors operating on the demand and supply side. These include domestic production, arrivals in the market, quantity of imports, international prices, consumption requirements, expectations regarding behaviour of prices etc. Therefore, it is difficult to segregate the impact of one factor on the level of prices. In the context of discussion regarding whether and to what extent futures trading has contributed to price rise in agricultural commodities
