The forward market describes the over the counter market in contracts for future delivery or, in physical commodities, for later shipment. Forward contracts are personalized between parties and thus are infrequently exchange traded. The forward market is a general term used to describe the informal market by which these contracts are entered and exited.
Marketing boards can be traced back to the colonial period, established to promote the interests of farmers, notably price stabilization and agricultural development and extension.
Following independence, marketing boards were used by African governments to control the distribution of inputs for agriculture, to purchase farmers crops, and as instruments of political patronage.
Established after liberalization and marketing reforms were implemented in several African countries, commodity exchanges have shown that it is possible for institutions to be designed to overcome problems of information and enforcement in the agricultural marketplace.
The "Flexible forward" is a new forward modality traded in a specific market segment.
As for the seller, it is estimated a remuneration higher to the one of the traditional forward operation, because as the flexible forward is more attractive for the buyer it will probably be willing to pay higher interests for this contrac.
Considering that the flexible forward profile is similar to the traditional forward's, it is believed that the main buyers and sellers will belong to the same groups of investors of the traditional forward.
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