Texas FFA Livestock Judging PracticeTest

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Enhance your skills in livestock judging with the Texas FFA Livestock Judging Test. Utilize flashcards and multiple choice questions, with hints and explanations to prepare effectively. Ace your exam!

Practice this question and more.

A system that is used for trading contracts for future delivery of cattle is known as?

Cash market
Futures market
Spot market
Negotiated market

The correct answer is: Futures market

The correct answer is the futures market. This system involves contracts that allow buyers and sellers to agree on a price for cattle that will be delivered at a specified date in the future. The purpose of the futures market is to provide a platform for producers and consumers to hedge against price fluctuations. Producers can lock in prices for their cattle ahead of time, reducing the risk of price decreases before the cattle are sold. Conversely, buyers can secure their purchasing costs against potential price increases. This market also includes various participants not directly involved in cattle production, such as speculators who seek to profit from price movements. The cash market, in contrast, refers to transactions where payment and delivery occur immediately, which does not involve future delivery contracts. The spot market, much like the cash market, involves immediate exchange without deferring delivery. The negotiated market describes transactions that may involve some level of bargaining between buyers and sellers, but does not specifically pertain to standardized contracts for future delivery like the futures market does.