To Buy Commodity Futures: How

: Her contract at $1.10 is now very valuable because she "locked in" a lower price.

: Sarah and Alex enter a futures contract through a regulated exchange. They agree on a price of $1.10 per pound for delivery in six months. how to buy commodity futures

Basics of Futures Trading * A commodity futures contract is an agreement to buy or sell a particular commodity at a future date. * Commodity Futures Trading Commission | CFTC (.gov) How To Invest In Commodity Futures - SmartAsset : Her contract at $1

: Most traders like Sarah and Alex never actually touch the physical coffee. Instead, they "liquidate" or close their positions before the delivery date. Basics of Futures Trading * A commodity futures

: Three months later, a freeze in Brazil causes coffee prices to jump to $1.50 per pound.

: Alex pays Sarah the difference in cash. Sarah uses that profit to buy actual coffee from her local supplier at the new, higher market price, effectively "hedging" her costs. 🛠️ How to Buy Commodity Futures in Reality