Commodity Contract

A commodity contract is an agreement to buy or sell a specified quantity of a commodity at a certain price on or before a certain date. Commodity contracts are traded on futures exchanges and can be used to hedge against price fluctuations or speculate on future price movements.

There are two types of commodity contracts:

1. Futures contracts: A futures contract is an agreement to buy or sell a specific quantity of a commodity at a specified price on or before a specified date in the future. Futures contracts are standardized so that they can be traded on futures exchanges.

2. Forward contracts: A forward contract is an agreement to buy or sell a specific quantity of a commodity at a specified price on or before a specified date in the future. Forward contracts are not standardized and are not traded on futures exchanges.

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