Quote from nutmeg:
Not sure where I am at with this but I went long some cheddar cheese futures and heard on the street a mouse ate the cheese. Am I fucked or what?
Nope. If you don't plan to accept delivery (if you plan either to exit the position before delivery, or to roll it over into a farther-out month), it ain't your problem. And if you
do plan to accept delivery, you are protected by the exchange's Specifications For Delivery. One of the benefits of exchange traded futures contracts.
If you were speculating off-exchange by means of warehouse receipts,
and if your counterparty failed to insure the stored goods,
and if you failed to inspect the goods before delivery,
then you'd be up a stump. But you wisely chose exchange traded futures contracts and avoided the problem completely.
You can learn much more by reading up on "the cost of carry" of physical commodities. Transportation, storage, insurance, and financing (interest) are all part of the equation.
Obligatory joke: What's a musician's definition of PERFECT PITCH?
Answer: That's when you throw a banjo into the dumpster and it lands on an accordian.
