Commodity brokers use forward and futures contracts for which of the
following reasons?
A. The raw, unprocessed nature of commodities means that there is
always a third party to any commodity-purchase contract.
B. The riskiness of commodity production means that many
commodity producers go bankrupt before harvest time.
C. The seasonal nature of many commodities would lead to wide
variations in supply and price without these contracts.
D. Commodities come from many different countries with very
different currency exchange rates.

Commodity brokers use forward and futures contracts for the seasonal nature of many commodities would lead to wide variations in supply and price without these contracts.

What does a commodity broker do?

A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial derivatives.

How do commodity brokers make money?

Compensation for commodity brokers is often on a commission basis. They receive a percentage of the gross commissions from the trades placed by their customers. Commissions are fees for the execution of buying and selling orders. Some commodity brokers are highly successful.

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