• Refers to the quality of a potentially deliverable commodity. It can refer to sulfur content for crude, country of origin for coffee or cocoa, or other distinguishing factors which influence the item. Often there is a schedule of premiums and discounts to adjust the invoice or delivery price for grade differences.
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| ||Exchange for physicals: Is an ex-pit transaction whereby physical commodities or actual financial instruments are exchanged for futures contracts. This flexible technique is permitted for bona fide hedging transactions. This procedure allows for Grades, quantities, locations, and delivery dates which are different than those stipulated for good delivery under the standard contract rules.|
| ||Forward: Is a market similar to futures in terms of deferred deliveries. However, notable differences include the lack of contract standardization, the lack of a central clearinghouse, the potential for substantial counterparty risk, but it allows contractual term customization and deliveries at times, points and Grades other than those listed for futures contracts. It is alsoused to refer to the bank currency market.|
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