Physical Delivery of Commodities

Discussion in 'Commodity Futures' started by benwm, Dec 1, 2010.

  1. benwm


    Is anyone willing to share their experiences of taking physical delivery of future? Or indeed delivering into the future?

    How would you go about this?

    In particular, which brokers have experience of this, or are there agents who might be able to deal on your behalf to store the produce, handle transportation and insurance etc?

    Since the underlying on gold is just a 3kg bar I could probably manage the storage issues for this one, but wheat, copper...ahhh

    Thanks in advance for any replies..
  2. local


    Have experience with delivery of grains. Delivery procedures are unique to each grain, e.g. delivery points, cost of storage, initiation of delivery procedure. It is possible to make/take delivery but often procedures are cumbersome. All of the procedures are spelled out in the contract specifications. If you are planning on taking delivery of KC wheat, you should be aware that they ahve increased storage rates going forward. This done in an attempt to discourage excessive long positions, probably won't work.

    Regards, local
  3. bighog

    bighog Guest

    You need to consult NoDoji, she took delivery of pork bellies once.

    There is a picture of her jumping up and down yelling to UPS delivery guy........... "MY freezer is not THAT big" :eek:

    May PB trading rest in peace. Was once the daytrading instrument De Reuiqer. (probably spelled wrong)
  4. My grandfather once took delivery on a trainload full of eggs as a result of being the executor of his father's estate.

    Messy business. I agree with local that you need to read the Contract Specifications. Yes, there are different brokers and agents involved in handling the physicals than the futures. Their commissions and things are much higher since you are stuck.

    Be aware, that most futures allow for a range of dates, locations, and qualities. If you are living in Chicago, don't be surprised if something is delivered in Miami a week early or something. Remember that the delivering party will deliver as is most convenient and cost effective for them. I would expect that the grain elevator/storage facility would insist on physical inspections and waiver signing before release. I doubt if you can just send a Fed Ex guy for a pick-up.

    If I remember right, there is even special paperwork with your broker acknowledged that you know you are taking delivery.

    Read the Contract Specification and ask your broker for the number of the people who handle these things. Since it is undoubtedly farmed out, it would be interesting to talk with them first about how these things are usually handled.

    Good Luck!
  5. benwm


    Maybe you could advertise your wares on eBay if you're really stuck for storage space.

    Thank you everyone for your replies. Would be good to hear more from NoDoji and others.

    I'm just curious as to the procedures involved. For example, when you take delivery off 1000s of eggs does someone have to check that every egg is not damaged or would a 'quality inspector' at the exchange sample ten eggs and say, "good to go!"

    (and that's no yoke)
  6. benwm


  7. benwm


    No Doji sent me a private email with regard to her experience trading pork bellies. She's a little embarrassed to tell all to the ET world, but I got the feeling she ate nothing but pork bellies for five months.
  8. NoDoji


    "No comment." - NoDoji's spokesperson

    "Oink!" - NoDoji

  9. :p
  10. I thought she was a vegetarian. Maybe after eating 40,000 lbs of bacon, She changed her ways!! I also believe, she has a couple rail cars of crude oil in her backyard.... :eek:
    #10     Dec 14, 2010