In this video, you will learn about commodities law. The video specifically discusses commodity futures. Commodity futures are defined as buy/sell contracts of commodities fixed at today’s price, but realized on a future date. Examples are given in the video.
One example is about coffee. The price of coffee has been closely followed for years, specifically coffee beans. Large retailers can hike up the price of coffee. Due to global imports, people believe that the price of coffee will continuously go up. Since the price is most likely going to go up, some people invest in the market- assuming that it is going to make their money. Commodities futures is an agreement between two people to exchange some type of commodity. In this case it is coffee. The exchange is for money in this case, but it doesn’t always have to be. The exchange will be made at a future date, but at a price fixed to the perceived market increase. The benefits of doing this don’t always outweigh the drawbacks. Oftentimes, people can be wrong about the value of a product increasing. Some people will make a large investment and sign a contract, but end up losing money.