Warehouse Receipt - Explained
What is a Warehouse Receipt?
Written by J. Mance Gordon
Updated at April 21st, 2024
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What is a Warehouse Receipt?
A warehouse receipt is issued to serve as a proof that certain goods or commodities are stored in an approved facility at a particular time. Warehouse receipts list the types, number, and other identifying characteristics of the stored goods.
A warehouse receipt is a document used in futures markets as a proof that certain commodities are kept by the owners within a warehouse. The receipt contains the name of the owner of a commodity, the quantity stored in a warehouse, and the condition of the commodity when it was stored.
How is a Warehouse Receipt Used?
Without the receipts, no delivery of stored commodities can be made.
Warehouse receipts are used to settle futures contracts. A vault receipt is an example of warehouse receipt but it is used for metals. Vault receipts show ownership of precious metals stored in a warehouse, bank and other approved facilities.
Warehouse receipts are used for commodities stored which will be delivered or used later on. They are called commodities for physical delivery. Commodities for physical delivery are used to produce and manufacture many goods.
Tracking of physical inventory is a crucial process for future contracts. Commodity inventory must be registered with designated authorities and must be inspected and authenticated before they become useful in the future markets.