hedge to arrive contract


Contract used in futures trading where the futures price is determined when the contract is created, but the basis level is not determined until later, usually just before delivery. A hedge to arrive contract is typically used for commodities such as grain. A seller may choose to use this type of contract when he or she believes that future prices are high and are about to drop, because this locks in the future price and only leaves the basis price to be determined in the future.

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The hedge to arrive contract was quite interesting to me because some of it was not determined until very late.

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Sam was using the hedge to arrive contract in his dealings and this gave him a great deal of security in what the specific price would be at once sold.

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The farmers used a hedge to arrive contract in order to assure themselves a proper yield on the years harvest seeing as the winter was shaping up to be a long one.

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