InvestorQ : I understand that we can take delivery against commodity futures. How does that system work in practice?
sara Kunju made post

I understand that we can take delivery against commodity futures. How does that system work in practice?

Answer
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Rutuja Nigam answered.
1 year ago


Commodity futures are permitted for square up trading and also for actual physical delivery of the commodity. In case you intend to take delivery of commodity against the futures you will have to first adhere to the minimum size in which the delivery is permitted. You will have to intimate the exchange well in advance that you intend to take actual delivery of commodities. In the absence of any intimation, the exchange will assume that your trade is for square up only. So, if you are looking at crude oil futures then the price quote on the exchange is on a per barrel basis. The minimum lot size for trading is 100 barrels (1 barrel = 159 litres approx) and the minimum delivery size is 50,000 barrels. Delivery has to taken from the warehouse (JNPT port in case of crude oil) and the exchange will process delivery based on warehouse receipts. The exchange has limited role in the actual delivery as it is a spot market transaction and outside the purview of the commodity futures exchanges.