Definition

Noun: - The current delivery price of a commodity traded in the spot market: This is the price for immediate payment and delivery of a physical commodity, as opposed to a future contract price for delivery at a later date.

Usage

The term "cash price" is used primarily in finance, commodities trading, and economics to specify the immediate transaction cost of an asset. It is the price paid "on the spot."

Examples

• Noun:
  • The cash price for wheat has risen sharply due to the drought.
  • We decided to buy the metal at the current cash price rather than enter a futures contract.
  • The difference between the futures price and the cash price is called the basis.

Advanced Usage

• "Cash price convergence": Refers to the phenomenon where the price of a futures contract converges with the cash price as the delivery date approaches.
  • Traders monitor the market for cash price convergence at the end of the contract month.

Variants and Related Words

• Spot price: A direct synonym for cash price, used interchangeably in many markets.
  • The spot price of oil fluctuates throughout the trading day.
• Cash market: The marketplace where commodities are traded for immediate delivery at the cash price.
  • Most physical grain is sold through the cash market.

Synonyms

• Spot price: The price for immediate settlement and delivery.
• Current price: The prevailing market price at the present moment.

Related Terms and Concepts

• Futures price: The agreed-upon price for delivery of a commodity at a specified future date, often contrasted with the cash price.
  • Analysts compared the December futures price to the cash price to assess market expectations.
• Basis: In commodities trading, the difference between the cash price and the futures price.
  • A strong basis means the cash price is significantly higher than the futures price.

Noun

1. the current delivery price of a commodity traded in the spot market