In a corn futures contract, who decides when delivery will take place: a. The delivery date is specified in the exchange.
Corn futures are delivered in many ways.
The holder of a short position must be willing to deliver the underlying commodity. A shipping certificate or a warehouse receipt are the delivery instruments for Grain and Oilseed futures. Only exchange-approved warehouses are permitted to register and deliver these certificates or receipts.
A commodity futures contract is delivered by whom?
By sending a “Notice of Intention to Deliver” to the exchange, the party with the short position commences delivery. The exchange includes a method for selecting a delivery party with a long position.
Is it possible for you to take delivery of a futures contract?
Physical delivery is not possible at IB because it lacks the essential infrastructure. Account holders may not make or receive delivery of the underlying commodity for futures contracts that are settled by real physical delivery of the underlying commodity (physical delivery futures).
It is the account holder’s responsibility to get familiar with each product’s close-out deadline.
If an account holder does not close out a physical delivery futures contract before the close-out deadline, IB may liquidate the account holder’s stake in the expiring contract without further notice.
Liquidations will not affect working orders in any other way; account holders must ensure that open orders to close positions are modified for the current real-time position.
How can investors compensate for futures contracts before they are due to be delivered?
The ultimate date by which the underlying commodity for a futures or forward contract must be delivered in order for the contract’s terms to be completed is known as the delivery date. Most futures contracts are closed out with an offsetting position (selling to counter a long position and buying to offset a short position) before the actual delivery date to limit the risk of adverse price changes in a commodity.
What role does delivery play in a futures contract?
An oil producer must sell his or her product. They could do it with futures contracts. This allows them to lock in a price for selling the oil and then deliver it to the customer when the futures contract expires. A manufacturing company, for example, may require oil in order to produce widgets. They, too, may employ futures contracts since they like to plan ahead and always have oil coming in each month. This manner, they know in advance what price they will pay for oil (the futures contract price) and when the contract will expire, they will be able to take possession of the oil.
What is a contract to arrive?
Hedge To Arrive Contract – A to arrive contract is a transaction that guarantees the delivery of a specific grade of a commodity within a specified time frame. In the grain futures market, a hedge to arrive contract is frequently connected with commodities. A to arrive contract is essentially a contract that just locks in the futures price element of the contract. This is an agreement to deliver a particular amount of a commodity in the future in exchange for money. The basis can be established at a later time, but it must be done before the contract is delivered.
What is a basis agreement?
In the cash market, a basis contract is one in which the grain seller determines the basis portion of the cash price for a specific delivery time and quantity.
Commodity futures contracts are exchanged where?
Exchanges of Commodities A commodities futures exchange is where future contracts are transacted. The Chicago Mercantile Exchange, Chicago Board of Trade, and New York Mercantile Exchange are among them. 123 The CME Group now owns all of them. They are governed by the Commodities Futures Trading Commission.