Introduction

India has a very long tradition of commodity futures. It was having sporadic of futures markets almost all over the country in not only such diverse cash crops as Cotton, Oilseeds, and Raw jute and their products but also food grains. Futures trading started with the setting up of Bombay Cotton Trade Association in 1875. The organized futures trading started in 1922 by the East India Cotton Organization. More and more commodities were added between 20’s and 40’s, for futures trading like Groundnut, Groundnut oil, Raw jute, Jute goods, Castor seed, Wheat, Rice, Sugar, Gold and Silver. This was indicative of a very long tradition of commodity futures in our country.

This is on the basis of recorded regulation in various provinces in pre-independence time. But sporadic futures trading are heard even prior to that. Teji, mandi, gali, phataks are the derivatives of futures heard happening centuries ago. Wheat markets were in existence in several centers of Punjab and UP. The prominent and active was the Chamber Of Commerce of Hapur, which was established in 1913. Other markets were located at Amritsar, Moga, Ludhiana, Jalandhar, Bhatinda, in Punjab and at Meerut, Hathras, Saharanpur and Barreily in UP.

Futures trading in wheat have been taking place since long back at various renowned commodity exchanges of world like Chicago Board of Trade (CBOT) in Chicago; USA, Winnipeg Commodity Exchange in Canada, Kansas City Board of Trade in Kansas, USA, Minneapolis Grains in Missouri, USA and many other exchanges located in Japan, Australia, and East European Countries.

This bears testimony to the fact that the food grains are suitable for futures trading. With evolution of scientific grades and standards, scientific warehousing systems and practices, advances in transportation and communication, trading, clearing and settlement systems provides the necessary environment of competitive futures market