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Warehouse receipt

The transferable title document that changes hands in a commodity futures delivery, representing goods stored at an approved facility.

You do not receive bushels in a truck. You receive a receipt from an exchange-licensed elevator, vault or tank farm, which entitles you to the goods and obliges you to pay storage from that day forward.

Holding receipts is a real business decision: storage, insurance and financing accrue daily, which is the practical meaning of cost-of-carry.

Example: taking delivery of five corn contracts leaves you with receipts for 25,000 bushels at a registered Illinois River elevator, plus a storage bill of a few cents per bushel per month until you sell or ship them.

Related: physical-delivery, registered-and-eligible, storage-cost, cost-of-carry, delivery-notice

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Contango and backwardationTwo futures curves against contract expiry: one rising above spot, one falling below it.The same commodity, priced for delivery at different dates.78.0076.0074.0072.0070.00Futures pricespot+1m+2m+3m+4m+5m+6mMonths until the contract expiresspot price74.00CONTANGOlater contracts cost more than spotBACKWARDATIONlater contracts cost less than spot
Contango and backwardation. A futures curve shows what buyers will pay for delivery in one month, two months and so on. When later contracts cost more than the spot price the curve is in contango; when they cost less it is in backwardation.

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