N

NAFTA - The North American Free Trade Agreement, implemented on January 1, 1994, is a trilateral agreement between Canada, the US, and Mexico. The purpose of the Agreement is to facilitate the free flow of trade and investment within the region. The NAFTA is an extension of the Free Trade Agreement Canada has had with the US since 1989. The NAFTA does however also include bilateral agreements, which govern trade between Canada and Mexico and the U.S. and Mexico.

Nearbys – See "Nearby Month."

Nearby Month or Nearby Delivery - Refers to the nearest traded contract month. For example, canola futures traded on ICE Futures Canada are November, January, March, May, and July. For instance, the "nearby month" on October 10 is November and the "nearby month" on December 1 is January.

Negotiable Warehouse Receipt - A legal document issued by a warehouse or elevator describing and guaranteeing the existence of a specific quantity and grade of a commodity in the warehouse or elevator. Transfer of ownership is made by endorsement of the owner of the receipt. See also "warehouse receipt."

Net Position - The difference between the number of long contracts and short contracts of any one commodity held by an individual or group.

New-Crop Lambs – New-crop lambs are those coming to market in the year of birth, usually at six months of age or less. These lambs may be 'off-the-ewe' or from a feedlot. They usually command a small premium to old-crop lambs except in years of lamb shortages. See "old-crop lambs."

Nominal Price - A calculated price quote for a futures or options contract for a time in which no actual trading took place. It is usually an average of bid and ask prices or a projected price calculated by using historical relationships to other contracts which were more actively traded at the time.

O

Old-Crop Lambs – Old-crop lambs are those coming to market in the year after their birth, typically between January and April the following year, when lambs are usually in short supply. They may also come to market as late as June.

Off – A basis quote indicating the number of points the cash price will be under a specified futures contract month's price. Example: 20 points off December. Not commonly used.

Offer - A willingness to sell a specific amount of a commodity or number of futures or options contracts at a specified price. Opposite to "bid."

Offset – Closing out a futures contract position by trading an equal number of contracts of the same month and the same commodity. For example, an individual who is long five December Barley futures, would offset that position by selling five December Barley futures.

On – A basis quote indicating the number of points the cash commodity is above a specified futures contract month's price. Example: 20 points on December. Not commonly used.

Open-Basis Contract – An unpriced forward contract between a buyer and seller that locks in the commodity's futures price, the amount to be delivered and the delivery period for a commodity to be delivered later. The final price is determined at a later date, when the seller locks in the basis prior to or up to the day of delivery, depending on the details of the contract. Also known as a "futures-first contract" or "to-arrive contract."

Open Contracts – See "open interest."

Open Interest - The total number of either long or short futures contracts of a particular commodity that exist at any one time that have not yet been offset or fulfilled by delivery. Open interest may be quoted for a specific futures month or as a total for all futures months of a commodity.

Open Order (or Orders) - An order to buy or sell futures contracts or options that is good until cancelled or until the particular futures contract expires.

Opened – Term used to describe new futures or options orders to commodities brokers that have been carried out. See "fill or filled."

Opening - The period at the beginning of each trading session, officially specified by the exchange, during which all futures and options bids, offers or trades are considered to be made "at the opening." There is no set time from the beginning of trade that is considered "at the opening." The time varies from exchange to exchange.

Opening Price (or range) - The price or range of prices at which the first bids and offers for futures or options were made, or the first actual trades were completed.

Open Outcry - A type of auction, used in many commodity exchanges, where each trader stands in a pit or ring and bids (to buy) and offers (to sell) futures or options contracts using a combination of verbal and hand signals. Many trades may take place at the same time at different places in the trading pit or ring. The price for each completed transaction is arrived at between a willing buyer and willing seller or a number of willing buyers and sellers. See "electronic trading."

Option

  1. The right of an individual to complete or not complete a transaction or agreement within a specified period of time based on previously agreed terms.
  2. A contract giving the option buyer the right, but not the obligation, to buy or sell a specific futures contract at a specific price before a specified date, regardless of the market price of that futures contract at the time of the futures purchase or sale. See "put option" and "call option."

Option Premium - The price of a particular put or call option arrived at by open outcry or computerized competitive buying and selling of that option in the options market. See "open outcry" and "electronic trading."

Out-of-the-Money – Refers to an option that would not be profitable to exercise. For example, a November $300 call option would not be profitable to exercise (convert to long futures at $300 per tonne) if the Nov futures are currently trading at $278 per tonne.

Overbought - A market situation where the price, based on certain technical analysis calculations, has risen too quickly or too high in relation to the actual conditions of supply and demand.

Oversold - A market situation where the price, based on certain technical analysis calculations, has fallen too quickly or too low in relation to the actual conditions of supply and demand.

  • Agricultural Marketing Glossary
  • Agricultural Marketing Glossary – N, O