The London-based company has purchased high-end clothing from fashion shows and sales events around the world. It was necessary for the company to export trades to pay suppliers immediately, so a cash contract helped the company buy clothes in large quantities efficiently and immediately. Commodity futures prices are not always higher than spot prices. Futures prices take into account, among other things, expectations of supply and demand, as well as the level of production. Low productivity equal cost at equal price: as an economist with a deep interest in truck driving productivity, I have known this connection for a long time. This is explained by the fact that the random and chaotic nature of the spot market gives it a lower productivity than the much more orderly contract market. It`s easy to tailor equipment to demand if you know what demand will be, not with the volatile spot market. People think it`s a low-rate market because of this man who lands in Maine on Friday afternoon without charging in Chicago. He will take everything to ride on i95 South. But remember, the same goes for the shipper who needs an extra truck to arrive in Maine on Thursday. What truck driver would move this load if he knew he had to come back empty. The shipper must hedge this risk at Thursday`s rate.
Over time, Maine`s spot market generates average spot prices that cover the cost plus a margin to account for the additional risk of entering it. In finance, the cash date of a transaction is the normal settlement date on which the transaction is concluded today. This type of transaction is called spot operation or simply spot transaction. Open an account to trade live cash prices or create a demo account to trade in a risk-free environment. The price of the futures contract is usually determined on the basis of the spot price of a commodity, the expected changes in supply and demand, the risk-free return for the holder of the goods and the transport or storage costs in relation to the expiry date of the contract. Longer-term futures generally incur higher storage costs than contracts with close expiration dates….