Trade · 6 pages · 12 min

How futures differ from the crop in the field

A futures contract is a standardized, clearable promise, while the crop is a particular field of plants.

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From the opening

A futures contract is a standardized agreement, cleared by an exchange, to buy or sell a set quantity of a commodity for a named delivery month. The crop in the field is a particular stand of plants in a particular place, still subject to weather, and not yet the interchangeable lot the contract describes. The opening covers the contract is standardized and cleared, offset replaces most delivery, and the field is a particular crop.

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Inside

The contract is standardized and cleared
Offset replaces most delivery
The field is a particular crop
Basis links them after harvest
Where the idea stops applying
A distinction worth keeping

Sources

Exchange-traded futures contract
Physical crop versus futures delivery

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How futures differ from the crop in the field

From the opening

Inside

Sources

Also on the desk