Commodity Futures- The Perfect Hedging Tool to Manage Risk Exposures


Vadodara (Gujarat), November 02, 2015:Considering the urgency and importance of educating the commodity stakeholders about the commodity futures market at a time when there is volatility in commodity prices due to growing economic uncertainty, Multi Commodity Exchange of India Ltd (MCX) organized awareness programmes on price risk management, in Vadodara last week. These programmes were jointly organized with two industrial associations, viz. Federation of Small Scale Industries, and Makarpura GIDC Industrial Estate Infrastructure& Charitable Association.

The programmes started with a detailed presentation on the dynamics of Indian commodity futures market, and the hedging tools it offers, thus fulfilling the market need for risk management. Later, the experts from MCX apprised the market participants about the commodity exchanges in India, which provide a platform to the commodity stakeholders, including the SMEs, and MSMEs, to mitigate price risks to which they would be exposed to and the volatility associated with commodity prices.

While speaking about the benefits of futures contracts in base metal segment offered by the Exchange, Ms. KomalKanzaria, Assistant Vice President, MCX said,“In line with the needs of the base metal value chain participants, MCX offers futures trading in copper, aluminium, zinc, nickel and lead, which are benchmarked to international prices, thus enabling the market participants to manage their price risks effectively.”

Mr. Vinod Desai, Executive Director, Federation of Small Scale Industries said, “As we all are aware, price volatility has been unusually high in base metals in recent times. And fact of the matter is, none of us can escape from the impact of volatility on our business, which eventually leads to weaker and more unpredictable earnings, while changes in raw material costs generally cannot be transferred quickly and efficiently down the value chain. However, keeping all this in mind the only way to effectively deal with commodity price risks is hedging through exchange platforms such as MCX.”

Bipinbhai Patel, President, Makarpura GIDC Industrial Estate Infrastructure& Charitable Associationsaid, “Commodity exchanges such as MCX are highly efficient platform for the commodity chain participants, including the base metal stakeholders, to manage their price exposures in a more efficient manner. They make the commodity markets more vibrant, inclusive, and competitive.”


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