How much does a commodity futures lot cost?
One commodity futures lot in Indian agricultural contracts costs roughly 18,000 to 110,000 rupees in margin, depending on the crop and current volatility. The total cash you need is about 1.5 to 2 times the margin to safely hold one lot.
A single commodity futures lot can cost you anywhere from 50,000 rupees to over 200,000 rupees as margin money — even though the contract itself controls goods worth ten times more. That gap surprises most beginners. Agricultural Commodities futures look cheap on the surface, but the real cost is hidden inside lot size, tick value, and exchange margin rules.
Below, you get the full math: what one lot actually costs to hold, how the exchange decides that number, and how a small price move can swing your account by thousands.
How a commodity futures lot is priced
A futures lot is a fixed quantity of the underlying commodity. You do not pay the full value. You pay a margin — a refundable deposit the exchange holds while your trade is open.
The cost has three parts:
- Initial margin — set by the exchange, usually 5 to 12 percent of contract value.
- Exposure margin — an extra buffer, often 2 to 5 percent.
- Mark-to-market — daily profit or loss settled in cash.
So if a contract controls goods worth 1,000,000 rupees and the total margin is 8 percent, you need 80,000 rupees to open one lot. Add a small cushion for daily losses and your real working capital is closer to 100,000 rupees.
Real lot costs across agricultural commodities
Each agricultural contract has its own lot size. The exchange publishes these. Below are typical numbers for popular Indian contracts at recent price levels. Treat them as a guide, not a quote — actual margin moves daily.
| Commodity | Lot size | Approx contract value | Approx margin per lot |
|---|---|---|---|
| Cotton | 25 bales | 1,400,000 rupees | 110,000 rupees |
| Mentha oil | 360 kg | 340,000 rupees | 40,000 rupees |
| Castor seed | 10 metric tonnes | 650,000 rupees | 55,000 rupees |
| Cardamom | 100 kg | 200,000 rupees | 22,000 rupees |
| Kapas | 4 metric tonnes | 180,000 rupees | 18,000 rupees |
The cheapest agricultural lot starts near 18,000 rupees in margin. The heavier ones like cotton can lock up over 100,000 rupees. That is your true entry cost.
Why lot cost changes every single day
Margin is not fixed. The exchange recalculates it overnight using a model called SPAN. SPAN looks at how much the commodity could move in one bad day and asks for enough cash to cover it.
Volatility goes up — margin goes up. A monsoon scare on castor seed, a frost warning on mentha — and the margin per lot can jump 20 percent in a single session. You may get a margin call the same evening.
The official source for these numbers is the Securities and Exchange Board of India, which sets the margin framework all exchanges follow.
Tick value: the small move that costs real money
The tick is the smallest price change allowed in a contract. Multiply the tick by the lot size and you get the rupee value of one tick.
Take cotton. The tick is 10 rupees per bale. Lot size is 25 bales. So one tick equals 250 rupees. If cotton moves 100 ticks against you in a session — common during a global price scare — you lose 25,000 rupees on one lot. That is roughly a quarter of your initial margin gone in a few hours.
The lot you can afford is not the one you can open. It is the one you can survive a 5 percent move against.
Costs to budget on top of margin
The margin is not the only money leaving your account. Plan for these too:
- Brokerage — usually 20 to 50 rupees per lot per side, sometimes a flat fee.
- Exchange transaction charges — a fraction of contract value, set by the exchange.
- SEBI turnover fee — a small statutory charge per lakh of turnover.
- GST — 18 percent on brokerage and exchange fees.
- Stamp duty — varies by state, charged on buy side.
For one round trip on a mid-size agricultural contract, total costs land around 150 to 400 rupees per lot. Small, but they eat profits on scalps.
A worked example
You buy one lot of castor seed at 6,500 rupees per quintal. Lot size is 10 tonnes (100 quintals). Contract value is 650,000 rupees. Margin is 55,000 rupees.
Price rises to 6,580 — an 80 rupee move per quintal. Your gross profit is 80 times 100, or 8,000 rupees on margin of 55,000. That is a 14.5 percent return on a 1.2 percent move in the underlying. Leverage works both ways. The same move down would erase 14.5 percent of your capital.
How much cash you really need to start
For one agricultural lot with a margin of 50,000 rupees, plan to keep at least 1.5 to 2 times that amount in your trading account. The buffer absorbs daily losses, intraday margin spikes, and exchange charges without triggering a forced exit.
So 75,000 to 100,000 rupees is the practical floor for one lot. With less, one bad morning closes your position at a loss you did not choose.
FAQs
Is the margin refundable?
Yes. When you close the lot, the full margin returns to your account. Only your profit, loss, and charges are kept.
Can I trade fractional lots?
No. Futures only trade in full lot sizes set by the exchange. If you want smaller exposure, use a contract with a smaller lot or stay in the cash market.
Why is agricultural margin lower than equity index futures?It is not always lower. Agricultural margins reflect the volatility of that specific crop. Cardamom and kapas trade thinly, so margins look cheaper, but slippage costs more.
Frequently Asked Questions
- What is the cheapest agricultural commodity lot to trade?
- Kapas and small cardamom lots have margins near 18,000 to 22,000 rupees, making them the cheapest agricultural futures to open. Liquidity is thinner, so factor in higher slippage.
- Does the margin amount change after I open the position?
- Yes. Exchanges recalculate margins overnight based on volatility. A sudden price move can raise the margin requirement and trigger a margin call the same evening.
- How is one tick value calculated for a commodity lot?
- Multiply the minimum tick size by the lot size. For cotton, a 10 rupee tick on a 25 bale lot equals 250 rupees per tick of price movement.
- How much cash should I keep beyond the margin?
- Keep at least 50 to 100 percent extra cash above the initial margin. This buffer covers daily mark-to-market losses and sudden margin spikes without forcing an exit.
- Are brokerage charges the same for all commodity lots?
- Most discount brokers charge a flat 20 to 50 rupees per lot per side. Full-service brokers may charge a percentage of turnover, which scales with contract value.