This booklet deals a proof of why commodity processors and purchasers use futures markets. It argues that they use futures contracts as a part of an implicit approach to borrowing and lending commodities, opposite to the permitted view of purchasers averse to the fluctuating worth in their inventories short of coverage opposed to cost probability. utilizing types built to provide an explanation for the call for for funds, this e-book demonstrates that risk-neutral purchasers have adequate cause to exploit futures markets. additionally, the booklet exposes significant inner inconsistencies within the permitted clarification. instead of assurance markets, the correct analogy is the cash industry, that is the purpose the ebook establishes via discussing genuine personal loan markets in commodities. This perception into the functionality of futures markets is then used to give an explanation for how futures costs for various supply dates exhibit a time period constitution of commodity-specific rates of interest and why futures markets flourish for a few different types of commodities and never for others.

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