The CRB is unusual in that the weights are set in stone and are seldom changed.

Other indices
change their weights more often.

The fundamental distinctions between the various benchmark indexes are the amount and
weights of particular commodities. The CRP is a well-balanced and well-adjusted index. A
higher-than-average share of particular commodities is seen in other indices. ABN AMRO
Research & Strategy picked the CRB as the benchmark for this reason.

Sales
Livestock
7%

Energy
Energy
39% Precious Metals
Agriculturals
Base Metals
34%
Agriculturals
Livestock

Base Metals Precious Metals

13% 7%

Figure 2: Weights of commodities in the CRB Index

4.1.7 Future of the futures market

In an economy, the derivative market provides two primary functions. It allows people who are
affected by market price fluctuations to hedge their positions. It is especially true for
agricultural and basic products, whose supply is strongly dependent on natural factors such as
weather. In this market, the producer can fix the price of his goods in advance by agreeing to a
forward contract. Buyers can confirm the purchase price in the same way. In truth, commodities
futures began as a method of forecasting, albeit they were later utilised primarily for
speculating. In India, for example, speculative transactions account for nearly 95 percent of all
futures trading volume. Another economic service performed by the derivative market is price
discovery.

Despite its true social value, the commodities market has long been chastised on the grounds
that it encourages unethical speculation and hoarding, as well as fuelling inflation in the

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