Grading Certificate

AAA

DEFINITION of 'Grading Certificate'

A document issued by inspectors or an approved grading panel that formally signifies the quality of a commodity. The grading certificate is important because a commodity must be identified as exchange grade to be deliverable. Commodities exchanges issue detailed guidelines describing the characteristics that qualify a commodity as exchange grade.

INVESTOPEDIA EXPLAINS 'Grading Certificate'

For example, a grading certificate for cocoa would indicate its growth (country of origin), description, condition (hammy or smoky), grade (which indicates the percentage of defective beans in the total) and count (number of beans per kilogram), and state whether the cocoa meets the commodity exchange's standards. The certificate would only be valid for a limited time as determined by the exchange, such as the current delivery month plus one month thereafter.

RELATED TERMS
  1. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  2. Approved Delivery Facility

    A facility authorized by an exchange to be used as a location ...
  3. Basis

    1. The variation between the spot price of a deliverable commodity ...
  4. Basis Grade

    The minimum accepted standard that a deliverable commodity must ...
  5. Futures Contract

    A contractual agreement, generally made on the trading floor ...
  6. Delivery Instrument

    A document given to the holder of a futures contact that may ...
Related Articles
  1. Options & Futures

    Intro To Open Interest In The Futures ...

  2. Options & Futures

    Interpreting Volume For The Futures ...

  3. Options & Futures

    Options On Futures: A World Of Potential ...

  4. Insurance

    Futures Fundamentals

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center