<P> The United States followed in the early 19th century . Chicago has the largest future exchange in the world, the Chicago Mercantile Exchange . Chicago is located at the base of the Great Lakes, close to the farmlands and cattle country of the Midwest, making it a natural center for transportation, distribution, and trading of agricultural produce . Gluts and shortages of these products caused chaotic fluctuations in price, and this led to the development of a market enabling grain merchants, processors, and agriculture companies to trade in "to arrive" or "cash forward" contracts to insulate them from the risk of adverse price change and enable them to hedge . In March 2008 the Chicago Mercantile Exchange announced its acquisition of NYMEX Holdings, Inc., the parent company of the New York Mercantile Exchange and Commodity Exchange . CME's acquisition of NYMEX was completed in August 2008 . </P> <P> For most exchanges, forward contracts were standard at the time . However, most forward contracts were not honored by both the buyer and the seller . For instance, if the buyer of a corn forward contract made an agreement to buy corn, and at the time of delivery the price of corn differed dramatically from the original contract price, either the buyer or the seller would back out . Additionally, the forward contracts market was very illiquid and an exchange was needed that would bring together a market to find potential buyers and sellers of a commodity instead of making people bear the burden of finding a buyer or seller . </P> <P> In 1848 the Chicago Board of Trade (CBOT) was formed . Trading was originally in forward contracts; the first contract (on corn) was written on March 13, 1851 . In 1865 standardized futures contracts were introduced . </P> <P> The Chicago Produce Exchange was established in 1874, renamed the Chicago Butter and Egg Board in 1898 and then reorganised into the Chicago Mercantile Exchange (CME) in 1919 . Following the end of the postwar international gold standard, in 1972 the CME formed a division called the International Monetary Market (IMM) to offer futures contracts in foreign currencies: British pound, Canadian dollar, German mark, Japanese yen, Mexican peso, and Swiss franc . </P>

Futures contracts are bought and sold in organized markets such as the chicago board of trade