Cash and carry arbitrage seeks to exploit pricing inefficiencies between the spot and futures markets for an asset by going long on the spot market and going short on the futures contract.
The idea is to “carry” the asset for physical delivery before the futures contract expires.
Cash and carry arbitrage is not entirely without risk, as there may be costs associated with physically “carrying” an asset before it expires.
Heating Degree Day (HDD) measures the average number of days the temperature falls below 65 degrees Fahrenheit. At this temperature, heating systems are turned on in buildings to maintain an average temperature of 70 degrees.
Roll forward refers to extending a derivatives contract by closing a contract that is about to expire and opening another contract at the current market price for the same underlying asset with a closing date in the future.
Agribusiness is a combination of the words “agriculture” and “business” and refers to any business related to agriculture and commercial activities related to agriculture.
Documentary collection is a method of trade finance in which the exporter’s bank sends documents to the importer’s bank and receives payment for the shipped goods.
Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined price and date in the future.
centner (abbreviated as CWT) is a standard unit of weight or mass used in some commodity markets. It can also be used to determine the price of small batches of goods.