Cash Commodity

In futures trading, the cash commodity is delivered for payments. In certain contracts, a party is obligated to physically deliver the actual cash commodity, such as soybeans, oil, or treasury bills. Other contracts can be cash-settled, meaning that cash changes hand, rather than the physical commodity. In contrast to cash commodities, delivery on future contracts typically happens at a later date.

A simplified view is that the futures market is comprised of two groups: speculators and hedgers. Speculators are looking to make profits by betting on price changes and have no interest in taking possession of the underlying commodities. Hedgers are firms which either produce or require the underlying commodity. They are often interested in taking or making physical delivery of the underlying commodity, at a specified price. For example, an airline may hedge its operating costs by using a futures contract to lock in the price on future delivery of jet fuel.

Investment dictionary. . 2012.

Look at other dictionaries:

  • cash commodity — An actual physical commodity someone is buying or selling, e.g., soybeans, corn, gold, silver, Treasury bonds, etc. Also referred to as actuals. Chicago Board of Trade glossary The actual or physical commodity. The market in which the physical… …   Financial and business terms

  • Cash commodity — The actual physical commodity, as distinguished from a futures contract. The New York Times Financial Glossary * * *    A physical commodity, such as bags of coffee or bushels of wheat, as distinct to a commodity derivative, such as a future or… …   Financial and business terms

  • Cash commodity —   The actual commodity or financial instrument as opposed to a futures contract based upon the commodity or instrument. See also Basis …   International financial encyclopaedia

  • cash market — A place where people buy and sell the actual commodities, i.e., grain elevator, bank, etc. Spot usually refers to a cash market price for a physical commodity that is available for immediate delivery. A forward contract is a cash contract in… …   Financial and business terms

  • cash-and-carry — An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract. Exchange Handbook Glossary * * * Ⅰ. cash and carry UK US (plural cash and carrys) (also cash… …   Financial and business terms

  • cash and carry — An arbitrage transaction involving the simultaneous purchase of a cash commodity with borrowed money and the sale of the appropriate futures contract. Exchange Handbook Glossary * * * cash and carry ˌcash and ˈcarry noun cash and carrys… …   Financial and business terms

  • Cash Settlement — A settlement method used in certain future and option contracts whereby, upon expiry or exercise, the seller of the financial instrument does not deliver the actual but transfers the associated cash position. For sellers not wishing to take… …   Investment dictionary

  • Commodity production — is the production of wares for sale. It is a type of production in which products are produced not for direct consumption by the producers, as in subsistence production, but are surplus to their own requirements and are produced instead… …   Wikipedia

  • Cash cow (disambiguation) — Cash cow may refer to: *Cash cow, a commodity that creates a large proportion or the majority of profits for a person or business * Cash Cow , a song by We Are Scientists from their album With Love and Squalor * Cash Cow , a song by Steve Taylor… …   Wikipedia

  • Commodity certificate — Commodity certificates are payments issued by the Commodity Credit Corporation (CCC) in lieu of cash payments to participants in farm subsidy or agricultural export programs. Holders of certificates are permitted to exchange them for commodities… …   Wikipedia

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