Go back to the [[Risk Management Main Page]]
Locking in Future Commodity Prices
On an exchange and standardised
Futures are settled on a daily basis, which has cashflow implications
Off exchange and customised
Not settled on a daily basis.
Different commodities to the usual ones. Customised factor is the biggest issue.
Contracts that obligate a buyer to buy an assett or a seller to sell an assett at a set price at a future time