The process of physical delivery can be explained in this way; if a seller is short a futures contract after the last trading day, he is obligated to deliver the underlying AJC stored at an Exchange-approved cold storage facility, per Exchange rules.  A long position holder of the futures contract after the last trading day is obligated to take delivery of the AJC and pay the agreed upon futures settlement price.  Further, the buyer will be responsible for any logistical costs associated with delivery, such as transportation and load out. 

As delivery months approach expiration there are a series of notices to which traders must respond if they intend to take, or make physical delivery.  More will be discussed on the steps involved in the physical delivery in a future AJC Update.

Typically, a small amount of physical product is delivered against a futures contract.  Cash market participants will likely still conduct business in the same manner with suppliers/buyers as they do today.  However, the advantage of the futures market to AJC cash market participants is the ability to lock in price and manage price risk until they need to obtain, use or merchandise the physical product.