The idea seems simple enough at first: anyone can become a member of the merchant class, without ever having to physically even see their product.
Commodity futures originally developed as a way of making the market more stable, guaranteeing future prices (hence the name) for staples like wheat, corn and cattle.
Every futures contract required three pieces of information: the agreed upon type and grade of the product (corn, dried, off the cob), a quantity offered per contract (5000 bushels), and a delivery date (November 15th). At first, this contract would be retained, and on the designated date, the product would actually be sent to you from Chicago. Read more…
