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  • 8.9.2-FUTURES MARKETS-DELIVERY

  • THE-COFFEE-GUIDE.gif 
  • Delivery

     
     

    Most futures transactions do not result in physical delivery of the commodity... 

    Depending on their strategy, futures traders usually make conscious decisions either to avoid delivery or to accomplish it. That is, they either make an offsetting transaction ahead of the delivery, thereby avoiding physical coffee being tendered to them; or they consciously force the exchange to deliver (tender) physical coffee by allowing the contract to fall due. Delivery must be completed between the first and the last trading days of the delivery month, although the exact terms vary from one market to the other.

    While the futures contract can be used for delivery, its terms are not convenient for all parties. For example, the terms of delivery of futures contract provide the seller with the exclusive right to select the point of delivery. This situation can obviously create difficulties for the buyer. In addition, the actual coffee delivered, while acceptable under the futures contract, may not match the buyer's specific quality needs.