CONTRACT GRADES

contract grades: translation

The standard grades of commodities or instruments listed in the rules of the exchanges that must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the standard called for by the exchange. Chicago Board of Trade glossary

   Standard grades for each commodity, which must be observed when commodities are delivered against futures contracts. Most contracts have a number of grades or qualities. If the delivered commodities vary from the contract grades then the price will be at a premium or discount when delivery actually takes place.

   ► See also Futures, Premium.

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