Cash Price

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DEFINITION of 'Cash Price'

The actual amount of money that is exchanged when commodities are bought and sold. The cash price usually will include all transaction, carry and transportation costs. Investors looking to benefit from changes in commodity prices can invest in commodity futures, which are anticipated cash prices. Changes in futures trading volume affect the volatility of cash prices.

BREAKING DOWN 'Cash Price'

The cash price is not the same as the futures price. The cash price is the amount paid for commodities on the spot market, where large manufacturers commonly purchase the commodities they need. Commodities are physical products that are generally indistinguishable no matter which company brings them to the marketplace. Examples include corn, crude oil, gasoline, gold, cotton, beef and sugar.

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RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
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    Electricity can be traded in the financial marketplace like any other commodity. Electricity futures trading offers an alternative ... Read Full Answer >>

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