Approved Delivery Facility


DEFINITION of 'Approved Delivery Facility'

A facility authorized by an exchange to be used as a location for the delivery of commodities tendered upon futures contracts. Approved delivery facilities are typically banks, storehouses, mills, warehouses, grain elevators, stockyards or other depositories where commodities are transferred between two parties in a futures contract that results in physical delivery. A futures contract position can be closed before delivery, at which point there is no exchange of a physical commodity. When a futures contract results in physical delivery, the commodity must be delivered by the seller to the buyer.

Also called "delivery points."

BREAKING DOWN 'Approved Delivery Facility'

Delivery generally refers to the changing of ownership or control of a commodity. A notice of intention to deliver usually precedes it. The new owner can take possession of the physical commodity, can deliver it to the futures market in satisfaction of a short position, or can sell the delivery to another market participant.

  1. Basis Grade

    The minimum accepted standard that a deliverable commodity must ...
  2. Actuals

    The physical commodity that underlies a futures contract or is ...
  3. Commercial Grain Stock

    The current amount of harvested grain crops stored domestically, ...
  4. Cash Commodity

    In futures trading, the cash commodity is delivered for payments. ...
  5. Certificated Stock

    The stock of a commodity that has been inspected by qualified ...
  6. Crop Year

    The time period from one year's harvest to the next for an agricultural ...
Related Articles
  1. Investing Basics

    The Role Of Speculators In The Commodity Market

    Contrary to popular belief, speculators are important for the market. Find out exactly what they do.
  2. Active Trading

    Commodities: The Portfolio Hedge

    These diverse asset classes can provide downside protection and upside potential. Find out how to use them.
  3. Options & Futures

    Trading The Soft Commodity Markets

    Learn the contract specifications for a few of the most heavily traded commodities.
  4. Active Trading

    Diamonds: The Missing Commodity Derivative

    While they may be "a girl's best friend", diamonds haven't made it to the futures market - yet.
  5. Options & Futures

    Commodities That Move The Markets

    Find out how the everyday items you use can affect your investments.
  6. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  7. Investing Basics

    What Does Plain Vanilla Mean?

    Plain vanilla is a term used in investing to describe the most basic types of financial instruments.
  8. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  9. Investing

    Oil: Why Not to Put Faith in Forecasts

    West Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
  10. Investing

    The Quinoa Quandary for Bolivian Farmers

    Growing global demand for quinoa has impacted Bolivian farmers' way of life. Should the American consumer be wary of buying this product?
  1. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  2. Can mutual funds invest in commodities?

    Mutual funds can invest in commodities. In fact, mutual funds may provide a better way for investors to gain exposure to ... Read Full Answer >>
  3. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  4. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  6. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!