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3
Future Delivery”. These markets deal entirely in forward deliveries of
merchandise at a specified future date.
Commodity prices tend to fluctuate; they are subject not only to changes
in demand but often still more to changes in supply. The supply of a commodity
may be affected by abundant or poor crops, by diseases, by increased acreage of
cultivation, by strikes or by government action. The market is informed about
such influences from day to day; it watches weather reports; crop estimates are
published regularly and examined with great care; existing stocks and current
consumption are compared and interest rates are taken into account. On all these
facts and forecasts the market bases its calculations and operations, and the
existence of a futures market tends to stabilize prices. This is how it works: if an
actual or anticipated surplus causes a drop in prices, dealers will buy spot and
thereby stem the fall; later when supplies become scarcer they will sell at a
profit and thus prevent too steep a rise.
III. Answer the questions.
a) According to the rules of the Commodity Exchange the broker deals only
with certain persons. Whom does the broker trade with? Are there similar
traditions as far as the commodity markets are concerned?
b) What is the main mechanism governing the work of the market called? Who
highlighted this phenomenon?
c) What two aspects of the performance of the market must always be in
equilibrium?
IV. Check up the pronunciation of unfamiliar words in a dictionary and read
Text 2 aloud.
Commodity and Money Markets (Text 2)
1. The organization of the commodity markets varies considerably.
2. Each market has a set of customs and traditions. 3. Trade is conducted at
3
Future Delivery”. These markets deal entirely in forward deliveries of
merchandise at a specified future date.
Commodity prices tend to fluctuate; they are subject not only to changes
in demand but often still more to changes in supply. The supply of a commodity
may be affected by abundant or poor crops, by diseases, by increased acreage of
cultivation, by strikes or by government action. The market is informed about
such influences from day to day; it watches weather reports; crop estimates are
published regularly and examined with great care; existing stocks and current
consumption are compared and interest rates are taken into account. On all these
facts and forecasts the market bases its calculations and operations, and the
existence of a futures market tends to stabilize prices. This is how it works: if an
actual or anticipated surplus causes a drop in prices, dealers will buy spot and
thereby stem the fall; later when supplies become scarcer they will sell at a
profit and thus prevent too steep a rise.
III. Answer the questions.
a) According to the rules of the Commodity Exchange the broker deals only
with certain persons. Whom does the broker trade with? Are there similar
traditions as far as the commodity markets are concerned?
b) What is the main mechanism governing the work of the market called? Who
highlighted this phenomenon?
c) What two aspects of the performance of the market must always be in
equilibrium?
IV. Check up the pronunciation of unfamiliar words in a dictionary and read
Text 2 aloud.
Commodity and Money Markets (Text 2)
1. The organization of the commodity markets varies considerably.
2. Each market has a set of customs and traditions. 3. Trade is conducted at
