How Does the Concept of "Deliverable Grade" Apply to Commodity Futures? ▴ Learn

How Does the Concept of “Deliverable Grade” Apply to Commodity Futures?

"Deliverable grade" refers to the specific quality, purity, and characteristics that a commodity must meet to be acceptable for delivery against a futures contract. Exchanges set these standards to ensure fungibility and prevent the seller from delivering inferior goods.

For example, crude oil futures specify a certain API gravity and sulfur content. This standardization is crucial for the contract's integrity.

Why Might a Producer of a Physical Commodity Prefer a Cash-Settled Contract?

What Criteria Must a Transaction Meet to Be Accepted into a Node’s Mempool?

How Does the ‘Fixing’ Process for Certain Commodity Futures Differ from Standard Equity Futures Settlement?

What Criteria Must a Transaction Meet to Be Accepted into the Mempool?