Financial markets: futures contracts

In the world of financial markets the price of futures contracts has been increasing at an accelerated rate. The best examples are primary materials whose prices have been affected directly or indirectly by high petroleum prices.

Monday, April 21, 2008

In general terms, these contracts are valid agreements for the future delivery of a product at an agreed-upon price. All publicly traded contracts for a given month are identical; only the price is negotiated. Some people criticize the mechanism because it encourages speculation.
However, proponents of the contracts say that futures contracts should reduce inherent risks due to the volatility of primary goods prices in the face of rapid political and economic changes, and in the case of agriculture futures, the weather.

More on this topic

Coffee Continues to Rise and Reaches $207 in 'C' Contracts

April 2014

The rise in coffee futures corresponds to expectations of lower production in Brazil and increased demand in the U.S., China and Europe.

From a report by Anacafé at the end of April 9th, 2014:

Coffee prices in "C" contracts closed at higher prices. The prices behaved in a volatile fashion.

Prices of Peruvian Coffee Futures Climb

August 2013

With the increase in premiums in their contracts large buyers are guarding against uncertainty over the Central American harvest volume affected by rust.

Terra.com.co reports: "The premium for Arabica hard bean washed coffee (HBMC) from Peru stored in the United States rose to an average of 14 cents over futures contracts observed in the U.S.

Coffee Futures Hit Record Prices

November 2010

After 13 years, prices in future contracts of coffee in the New York market are over $ 210.

This upward momentum comes not only from lower yield forecasts by main world producers of coffee, but also speculation. Dollar weakness encourages financial traders to hide their capital into commodities and coffee is one of the most sought after for future operations.

The mystery of sugar futures

June 2008

What is happening to sugar futures? Sugar prices currently stand at 14.70 US cents/lb., yet the March 2011 contract is 55 percent than this July's.

The same comparison – July 2008 to March 2011 – for coffee, shows an increase of 27 percent. Corn, oil and wheat show increases of 0.4 percent, 16 percent and 22 percent respectively.

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