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Forward Contract
Forward Contract
Image 1 A cash market transaction in which delivery of the commodity is deferred until after the contract has been made. Although the delivery is made in the future, the price is determined at the initial trade date.
Image 2 Most forward contracts do not have standards and are not traded on exchanges. A farmer would use a forward contract to "lock-in" a price for his grain for the upcoming fall harvest.


Commodity

Derivative

Forward Price

Forward Rate Agreement (FRA)

Non-Deliverable Forward