Bird of Malkeel's Book and Trade

A bedrock principle for commodity futures contracts with physical delivery is that the price of the futures contract and the price of a physical commodity should come together or what we call converge. It's based on something as simple as the law of one price, which is that the same commodity at the same location at the same time two lots should sell for the same price. And so if you can exchange the futures for the cash, then the price should be the same thing. All functioning of commodity futures markets rest on that bedrock principle - they always have to settle the differences during the delivery period.