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In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
Dear questioner, we would like to thank you for showing keenness on knowing the teachings of Islam, and we appreciate the great confidence you have in us. We hope our efforts meet your expectations.
Responding to your question, Dr. Monzer Kahf, Scholar in Islamic Economics & Financial Expert, states the following:
“Commodity markets were discussed in the OIC Fiqh Academy, in its seventh annual session held on May 9-14, 1992. Its resolution is that all commodity futures are not permissible according to the Shari'ah. The reason is that all futures include delaying both price and delivery of commodity and this is not permissible in Islam. Underlying this decision, I will highlight the following two points:
1. These are very speculative and only a small percentage, 3-4% ends implemented;
2. The classical Fiqh position of the prohibition against delaying both items in a sale contract. On the latter Ibn Taymiyyah was very strong.
I personally go along with the Fiqh Academy and I have only one reservation that I wrote about to the Fiqh Academy. It relates to real life contracts that require delaying both items exchanged. All businesses require planning in advance and all parties have to contract their products and their inputs in advance regardless of the idea of financing (remember that the salam is only a financing contract). The simplest example is the letter of credit. It always includes sale with postponement of both delivery and price and they are both effected in a future date at the same time. I believe that the evidence from the Sunnah against postponement of the two items is very weak and there is no claimed ’ijma' on this issue that I find one of the necessities of life to the extent that it is impossible that our complete Shari'ah would make it unlawful.
Yet, this is not to say that futures are permissible because I think only genuine trade with postponement of the two exchanged items (price and goods) is permissible not the speculative practice on price change only as it is normally in commodity futures. My advice is always against getting into it.”
If you have any further questions, please don't hesitate to write back!
May Allah guide you to the straight path, and guide you to that which pleases Him, Amen.
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