COMMODITY BASIS Introduction of Commodity Futures Markets Commodities are perishable and nonperishable goods that require proper shipment and storage. A spot market is a place where producers and consumers meet- the former sells their commodities while the latter buys them. While commodities trading has been around for centuries, financial speculators believe that commodity futures markets offer better options than the current system that most commodity brokers have become used to.
Commodity Futures Market This started back in the 19th century when farmers had to transport their crops through plank roads to find buyers. This meant travelling for days and by the time they reached the buyers, the crops were already starting to rot. Buyers and sellers had to look out for themselves and competitive bidding was the only way to go. To solve this issue, central markets were formed and contracts were made for forwarding (future) and spot (immediate) delivery.