Commodity derivatives are only speculative

The myth goes that commodity derivatives are only speculative in nature.

Any asset class where the prices are static is a dead asset. Agri commodity derivatives exhibit price movement basis fundamental factors like agricultural production, exports & imports, government policies, available stock etc.

Movement in their prices is a market-driven phenomenon. The decision to invest or speculate lies with the market participants. This is true for all products with scope for an increase in value.

Buying low and selling at higher is a basic thumb rule for making money. A trader who has stock will need to sell it. You buy anything to either consume it or sell it for a profit. The exchange offers an opportunity to buy and sell with efficient price discovery.  Speculators interest lies in price movement and using the underlying commodity. Some market participants exist to ride the wave of prices. They need not be producers or use commodities as input.

These participants help add liquidity to the contracts that are traded. They speculate the direction in which the price of a commodity is likely to move. This help in increasing the number of people willing to participate in buying and selling