Definition

Noun: A standardized contract to buy or sell a specific quantity and quality of wheat at a price determined today, with the delivery of the wheat to occur at a specified date in the future. It is a type of financial derivative traded on a commodities exchange.

Usage

This term is used primarily in the contexts of finance, agriculture, and commodities trading. It refers to the contract itself, not the physical wheat.

Examples

• The farmer sold wheat futures to lock in a price for his next harvest.
• Analysts are predicting a rise in wheat future prices due to the drought.
• Trading in wheat futures allows mills to hedge against price volatility.

Advanced Usage

• As a hedging instrument: Used by farmers (to secure a selling price) and food companies (to secure a buying price) to manage financial risk.
• As a speculative investment: Traded by investors who aim to profit from price changes without intending to take physical delivery of the wheat.

Variants and Related Words

• Commodity future: The general category of futures contracts for raw materials.
• Futures contract: The formal term for an agreement to buy or sell an asset at a future date.
• Forward contract: A similar, but typically non-standardized and privately negotiated, agreement.

Synonyms

• Wheat futures contract
• Agricultural derivative (specific type)

Related Phrases

• To hedge with wheat futures: To use these contracts to reduce price risk.
• The wheat futures market: The organized exchange where these contracts are traded.
• Futures price: The agreed-upon price within the contract.

Noun

1. wheat bought or sold at an agreed price for delivery at a specified future date