The Economics of the Commodity Market Operations.

Many organizations in the private and public sector, rely on commodities for inputs to their production processes. To provides the needed organizational structure for the purchasing and selling of these commodities formal commodity markets were established. This thesis investigates the different functions of the futures market organization as well as their behavior and performance. The focus is on the development of futures markets for a small range of commercial transactions. The market, because of its volatity is, overall, extremely risky. The future market organization not only permits a transfer of risk but also results in less total risk to society. Resulting from the reduced risk in the aggregate, larger amounts of production and inventory carryover are undertaken. A thorough understanding of the market organization and the causes of price movements are advised prior to entering into a transaction.