The standard grades of commodities or instruments listed in the rules of the exchanges that must be met when delivering cash commodities against futures contracts. Grades are often accompanied by a schedule of discounts and premiums allowable for delivery of commodities of lesser or greater quality than the standard called for by the exchange. Chicago Board of Trade glossary
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Standard grades for each commodity, which must be observed when commodities are delivered against futures contracts. Most contracts have a number of grades or qualities. If the delivered commodities vary from the contract grades then the price will be at a premium or discount when delivery actually takes place.
Financial and business terms. 2012.