How Does the Delivery Point Affect the Price of a Physically-Settled Contract?

The designated delivery point significantly impacts the futures price because it incorporates the transportation costs and logistical ease of moving the underlying asset to that location. If the delivery point is congested or difficult to access, the futures price may trade at a discount to reflect the extra costs or delays.

Conversely, a strategic or easily accessible delivery point can support a higher futures price. The delivery point is a key factor in determining the cost of carry.