Contango and Backwardation
Futures-curve conditions where later contract prices trade above or below nearby prices or spot value.
Futures basis, delivery month, convenience yield, contango, backwardation, and wide-basis mechanics.
Basis, delivery, and convenience yield explain why a futures contract can trade above or below the cash-market price of the same commodity. The core comparison is between the spot price and the futures price for a specific contract month.
Use this branch when the question is about the futures curve rather than only the outright price. Contango and Backwardation explains the curve shape. Convenience Yield explains the value of holding the physical commodity. Spot Delivery Month explains why nearby delivery rules matter. Wide Basis in Futures Market explains when the cash-futures spread becomes decision-relevant.
Before relying on basis analysis, verify the cash quote, futures contract month, delivery location, grade, storage economics, hedge horizon, and whether the position will be closed, rolled, cash settled, or exposed to physical delivery.
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Futures-curve conditions where later contract prices trade above or below nearby prices or spot value.
Implied benefit of holding a physical commodity instead of only holding a futures or forward contract.
Nearest futures delivery month in which the contract can move toward delivery or final cash settlement.
Large difference between a cash-market price and the related futures price, often creating hedge or delivery risk.