Rollover & basis
What is the delivery premium and how does it alter cash market clearing costs during contract expiration month?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
The delivery premium is the added cost embedded in near-expiration futures prices reflecting urgency and limited availability of deliverable-grade inventory as physical settlement approaches.
How it works
As a grain futures contract nears its delivery month, cash and futures prices converge, and dwindling deliverable supply or logistics constraints (available warehouse receipts/shipping certificates) can push nearby futures prices higher relative to deferred months, affecting local cash market clearing costs.
An example
Deliverable-grade corn tied to registered warehouse receipts commands a premium near contract expiry.
Risk & limitations
Delivery premiums vary by location and delivery-point logistics and can spike unpredictably.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.