Contango and Backwardation
Contango and backwardation describe upward- and downward-sloping futures curves and their implications for carry, hedging, and rolling exposure.
Futures basis, convergence, convenience yield, contango, backwardation, and delivery mechanics.
Basis, delivery, and convenience yield explain why a futures contract can trade above or below the cash-market price of a comparable commodity. Futures Basis starts with the cash-minus-futures calculation, then shows how location, grade, contract month, and basis changes affect a hedge.
Use this branch when the question is about the relationship between prices, not only an outright quote. Contango and Backwardation explains curve shape across contract months. Convenience Yield explains the implied benefit of having usable inventory now. Taking Delivery covers spot-month deadlines, physical settlement, and final cash settlement.
Before relying on the comparison, verify the spot price, futures price, quote convention, delivery location, grade, storage economics, hedge horizon, and settlement method.
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Contango and backwardation describe upward- and downward-sloping futures curves and their implications for carry, hedging, and rolling exposure.
Convenience yield is the implied non-cash benefit of holding usable physical inventory rather than only a futures or forward contract.
Futures basis is the difference between a cash price and a comparable futures price, a key input in commodity hedging and delivery analysis.