What does Spot Commodity mean?
A commodity traded in the spot market. Spot commodity is traded for actual physical delivery, as opposed to a commodity future that is usually not delivered. It is also known as a cash commodity or actuals.
Futures Knowledge Explains Spot Commodity
A spot commodity is an actual physical commodity bought or sold with the intention of actual delivery to the counter-party in the transaction. The contracting parties agree for immediate delivery of actuals, a set quantity and quality of the underlying commodity at pre-decided price on a specified date. While Gold, Silver, Crude Oil or Treasury Bonds are cash commodities, indices are not cash commodity. It is traded in the cash market, in contrast to the futures market.