Which one shows the curve going from backwardation to super contango. Both care about whether commodity futures markets are contango markets or normal backwardation markets. 4 days ago · Backwardation vs. Ft+1> Ft> S F t + 1> F t> S. Usually, a curve in contango encourages inventories to Oct 29, 2024 · What Is Contango? Contango is a situation where the futures price of a commodity is higher than the spot price. Contango is the reverse, where future prices are higher than in the present. The reverse, when future prices are lower and the curve slopes downward, is called “backwardation. Answer by CFA : contago is a condition in the futures markets in which the spot price is lower than futures price, the forward curve is upward sloping and there is little or no convenience yield Nov 24, 2024 · It shows the percentage of days the S&P 500 index is up and the percentage of days VX futures are in contango, where the front-month futures price is lower than the next-month futures price. All in one place. Guide to Contango vs Backwardation. Mar 1, 2024 · Overall, contango and backwardation are simply terms that define the shape of the futures curve for commodities. 在商品语言中， 有两个与日历价差相关的术语用来描述市场状况：contango和backwardation。 Contango 并不是新鲜事儿 当商品交易者提到contango时，这种市场状况是指远期交割月份的价格高于即期交割月份的价格。 以下是使用 COMEX黄金期货 的示例： 2014年12月：1192. Key TakeawaysContango is a situation where the futures price of Mar 20, 2019 · Contango vs. Mar 6, 2025 · Contango is normal because we are more uncertain about the future than the present. When a commodities market is in contango it means that there is an opportunity to arbitrage because buying Sep 14, 2022 · Contango is a theoretical term that describes the relationship between future prices and spot prices of underlying assets. Super backwardation can also be caused by a lack of supply of the commodity, which drives May 18, 2023 · Backwardation结构则是和Contango结构相对应的一种期限结构；Investopedia上是这么解释的：Backwardation is when the current price—spot—price ofan underlying asset is higher than prices trading in the futures market. Backwardation is sometimes confused with an inverted futures curve. Sep 21, 2024 · However, backwardation can also signal potential supply issues or market instability. Normal Backwardation: An Overview The shape of the futures curve is important to commodity hedgers and speculators. Understanding these market conditions is crucial for making informed trading decisions and managing risk in futures markets. Another name for this upward sloping forward curve is forwardation. 82 per Feb 4, 2015 · View Homework Help - Bloomberg Training Questions and Answers from FI 305 at Bentley University. May 15, 2024 · The difference in the negative roll yield for commodities in contango, like copper and corn, had the biggest effect on returns compared to the smaller effect from commodities in backwardation like The current dynamics of demand and production indicate the oversupply could persist for a while, a bad sign for oil investors. Futures prices reflect the anticipated increase in volatility, driven by factors such as storage costs, geopolitical events, or inflation expectations, which influence market pricing and trading strategies. These terms describe the shape of the futures curve, which is crucial for traders to understand before diving into futures trading. 24/7 support. Contango and backwardation might sound technical, but they show us the market’s outlook. According to our structural VAR model, the supply-demand imbalance is projected to reach 5. Dies ist normal, da Vermögenswerte tendenziell im Wert steigen und bei physischen Gütern Lagerkosten anfallen. The opposite, backwardation, is the default scenario. Feb 18, 2020 · Spot market prices for oil fell so much in February that they briefly became cheaper than contracts for delivery in six months’ time, a phenomenon known as “ contango ” that usually The market has flipped from backwardation to deep contango with time spreads reaching levels wider than those during the 2008 global financial crisis. This chart contrasts contango and backwardation—two key futures curve shapes—highlighting how market expectations shift over time. Gold contango creates arbitrage opportunities in this particular metal. Sep 18, 2019 · Contango occurs when the current futures price of an asset (as quoted in the futures market) is higher than the current spot price of the underlying asset. When a market is in contango, the forward price of a futures contract is higher than the spot price. Contango Contango is the opposite of backwardation. It also helps identify commodity's demand supply pattern. Contango and Backwardation give us the relationship between the forward proof (price in the future market) and spot price (current price). Want to learn more about contango and backwardation? Read our ultimate guide to contango and backwardation to learn what you need to know. This means that there is a forward premium and the forward curve is upward sloping. Beyond Contango and Backwardation: Hybrid States and Volatility While contango and backwardation represent the extremes of forward curves, hybrid states often emerge, reflecting mixed market signals. In periods of backwardation, does the existence of historical mean reversion in the VIX cause later contracts to be cheaper than near-term contracts (i. If a commodity's forward curve is downward sloping and there is little or no convenience yield, the market is said to be in : A) backwardation B) contango C) equilibrium Answer is B) contango. Backwardation vs Contango for Investors Contango and backwardation can occur in any commodities market, including oil, precious metals, or agricultural products. May 5, 2021 · Backwardation indicates the futures curve is falling, with spot markets and short-term futures contracts priced higher than longer-dated contracts. Jul 25, 2023 · Difference Between Contango vs Backwardation Contango and Backwardation are the terms used to define the price of the futures curve for a commodity. Dec 20, 2017 · Backwardation Contango is therefore clear – with the increasing time to expiration, the prices of contracts are rising. May 3, 2021 · When examples of backwardation and contango are presented on the same chart, you might find it helpful to envision each curve referring to a different asset, as one asset can only have one futures curve (barring the existence of multiple markets, etc. Backwardation is a trading term used to refer to a situation where the price of a future for a specific asset is lower than the expected spot price at the time of expiration of the future. Which one shows the curve going from backwardation to super contango? 3 4 Chart 1 Chart 2 Chart 3 Chart 4 With the spread of coronavirus, the crude oil curve went from backwardation to a super contango 2 3 Click on the Bloomberg CCRV charts on the right. 5 years; to easily visualize Backwardation Vs Contango (carrying charge) markets. more Apr 22, 2020 · Even in more normal markets, the structure of the forward curve “backwardation” and “contango” is a source of confusion – mystery even. The slope of a futures curve is influenced by various factors, such as seasonal demand, carrying costs, and market expectations. The curve has two dimensions, and plots time across the horizontal axis and delivery price of the commodity across the vertical axis. The typical way to show contango is with an upward sloping curve with maturity of the contract on the left side of the graph close the origin. These curves are not static and can shift based on changing market conditions and sentiment. Khan Academy Khan Academy Découvrez les différences entre les situations en contango et en backwardation, exprimées en points de déport et point de report sur les marchés à terme. Which is Better: Contango or Backwardation? Individual trading strategies and market conditions determine whether contango or backwardation is better. Contango结构下做正套——买进近月期货，卖出远月期货。 盈亏比应该是月差比上基差，如果正套想要盈利，那需要现货市场回暖，现货和近月价格涨幅比远月的涨幅更大；所以我们可以用来测试Contango结构的底部或者Contango结构能否转为Backwardation结构。 5. By the same token, a market that is deeply in contango may indicate a perception of a current supply surplus in the commodity. The opposite of contango exists when future prices show backwardation because supply limitations or strong immediate delivery needs drive down prices. Jun 27, 2012 · All in all, one could dare to make the observation that as the WTI super-contango episodes became eliminated — perhaps because a perception that tightness had somehow been injected into the Contango Traders, especially arbitrageurs, make use of contango when it widens or narrows from normal values. These refer to the pattern of prices over time, specifically if the price of a contract is rising or falling, but many times these two curves are confused for one another. On the previous sugar chart, however, you could see exactly the opposite situation – the term structure curve was falling. While contango refers to a situation where futures prices are higher than the spot price, normal backwardation is a condition where futures prices are lower than the spot price. In backwardation, near-term contracts are priced higher than those expiring later. A market that has steep backwardation — i. The graph depicts how the price of a single forward contract will behave through time in relation to the expected future price. Apr 30, 2025 · Conclusion Understanding backwardation and contango helps oil futures traders anticipate pricing pressure, structure trades more efficiently, and manage rollover strategies. Feb 8, 2023 · This could show up as backwardation in the commodities market. Apr 3, 2024 · Contango vs. Understand two different movements of the forward curve, contango and backwardation, and why these movements are important. In contango, the price of the November futures contract is higher than October's, which is higher Backwardation in commodity markets (including backwardation in gold) originates from the supply demand balance, to an extent; in fact, supply demand determines the shape of the forward curve. In contango, the volatility curve typically shows a steeper price rise over time. The Wikipedia graph has maturity on the right side of the graph so it shows a downward sloping line. Aug 22, 2020 · Other Important Contango and Backwardation Considerations: ETFs Futures prices can change over time as traders’ and investors’ views adjust, so the forward curve can shift from contango to backwardation or the other way around. What Causes Contango? Apr 4, 2024 · In a nutshell, futures price premium to spot is contango, a deep premium is a super contango, and the futures price at a discount to spot price is backwardation. A commodity is in contango when its futures price is higher than its spot price. The exaggerated upward sloping curve in super contango can lead to increased carrying costs and potential losses for market participants holding futures contracts over extended periods. Apr 17, 2020 · The forward curve in the NYMEX WTI crude oil futures market highlights the contango in the energy commodity. What is a super-contango? Super-contango is when the spot price for a commodity is trading dramatically below the futures price. 3 mb/d in 2021 which will further deepen the contango as inventories continue to What is Contango? Contango market pricing structure where prompt crude oil prices are below those in the future. At the other end of the table, stocks were 500 million or higher in only 2% of the weeks, and prices were in contango 2%. Contango situations are rare. Click on the Bloomberg CCRV charts on the right. Contango usually occurs when an asset's price is expected to rise over time. An inverted futures curve will show a falling slope as the prices of futures contracts falls over time. 40美元 Apr 30, 2025 · What grabs their attention is the behaviour of the futures curve and whether the price slopes upward (contango) or downward (backwardation). One possible explanation for this is the mean reverting nature of volatility where volatility can spend longer periods of time at lower or stable levels with occasional but mostly short-term spikes. Normal backwardation generally indicates the market's expectation that the asset price will decrease over time. Backwardation: The opposite scenario, where the futures price is lower than the spot price, resulting in a downward-sloping futures curve. This state of the market is referred to as backwardation. Learn what contango and backwardation mean in relation to the futures or forwards market. Jan 4, 2024 · Two fundamental concepts in this realm are contango and backwardation. Sep 4, 2023 · My understanding is that "contango", when describing the forward curve, describes forward prices that are above the current spot price, i. In other words, the more distant contracts were cheaper in February than the closer ones. 7 mb/d in 2020 and 3. A few fundamental factors such as the cost to carry a physical asset or finance a financial asset will inform the supply/demand for the commodity. , one where there is a very steep premium for material available for immediate delivery—often indicates a perception of a current shortage in the underlying commodity. May 21, 2020 · A few weeks ago, near-term oil-futures prices were far below those for oil to be delivered later in the year, but most of the gap has evaporated, a signal that supply and demand are more closely Jan 12, 2024 · Contango and backwardation are trailing indicators that give you a snapshot of what is currently happening without offering a clear view of what will happen in the future. Oct 17, 2024 · Oil markets are in “backwardation” — we’ll explain Geopolitical conflict is interfering with crude oil futures, causing oil prices to be lower in the future than they are today. First, we need to find a zero bar that is represented by the lighter blue color. The two graphs are saying the same thing, they just show time in a different way. Q2: Why is the VIX futures curve usually upward sloping (in contango)? A2: In calm markets, the current volatility is low. With the spread of coronavirus, the crude oil curve went from backwardation to a super contango 2 3 Click on the Bloomberg CCRV charts on the right. That results in an upward-sloping forward curve. Super-contango is a state in which a forward price of a commodity is higher than the spot price to a greater extent than can be explained by the interest and storage costs that explain the usual state of contango. Traders either think future prices will be higher or lower than current prices. Jul 9, 2024 · Contango vs. Contango and normal backwardation refer to the pattern of prices over time, specifically if the price Jan 1, 2025 · “The strategy trades 20 commodity futures monthly, taking long/short positions based on backwardation or contango in the curve, equally weighting and rebalancing to exploit futures price differentials. However, contango and backwardation were originally constructed to compare futures price vs expected spot price at expiry. Aug 11, 2023 · In contango, often associated with a normal futures curve, investors agree to pay more for a commodity in the future. Feb 13, 2014 · There is a cost or negative roll yield associated with rolling down the curve, also sometimes referred to as cost of carry. . Aug 21, 2023 · By connecting these points, the curve’s shape—whether in backwardation or contango—reveals market expectations about future supply and demand, the cost of carry, interest rates, and other factors. The forward curve is just a prediction of the future delivery of commodities. Super-contango usually occurs when the inventory space to store the physical commodity is running out due to excess supply – meaning that the cost of carry (the cost of storing a physical commodity) in a futures contract increases. The markets are dynamic, and therefore their structure may look different every day. Conversely, when a market is in backwardation, the forward price of the futures contract is lower than the spot price. Reverse that reasoning for backwardation. It helped me gain more understanding about futures and the stock market. The forward curve plots any asset price across time. By understanding these conditions, traders can identify arbitrage opportunities, optimize roll yields, and make informed investment decisions. Jul 30, 2020 · At the end of June, backwardation was only seen for the next two to three months, but analysts expected the full Brent futures curve to be in backwardation by the end of the year thanks to Jan 1, 2025 · Contango and backwardation are fundamental concepts in futures markets that influence trading strategies. According to this graph, are the futures in contango or backwardation? Backwardation Contango Feb 17, 2024 · The forward curve in a contango market slopes upward, while in backwardation, it slopes downward. A forward curve is said to be in contango (contango in gold) when futures (for instance gold futures) are traded at a premium over spot (for instance spot gold price). The working definition of contango is when the futures contract price of a commodity is greater than the current spot price. Jun 26, 2025 · Backwardation vs Contango Backwardationimplies a slope where near-month or front-month futures contracts trade at higher prices than longer-dated ones, leading to a downward sloping futures curve. Backwardation and contango Apr 22, 2020 · When trading in commodities futures, a situation in which the future price exceeds the spot price is known as contango. "Normal backwardation" is the phenomenon that the current forward price is below the expected spot price at expiry. Contango vs Backwardation. When this is flipped to Backwardation(As the above; contract prices decreasing into the future): it's a Contango and backwardation can have significant implications for commodity traders, hedgers, and investors in commodity ETFs (Exchange Traded Funds). These factors have tended to mean that historically commodity curve strategies tend to go through periods of strong performance in the aftermath of extreme backwardation as curves normalise back into contango, and in fact some of the highest returns have been realised after periods of highly stretched backwardation such as those currently being Feb 25, 2022 · Backwardation is a fairly rare condition that occurs in commodities and futures markets where it is cheaper to buy a commodity or other asset in the future than today. Backwardation and contango Sep 14, 2022 · Contango is a theoretical term that describes the relationship between future prices and spot prices of underlying assets. STRATEGY IN A NUTSHELL The strategy targets 20 commodity The opposite is true for a holder of a short futures position, where contango offers positive results, a backwardation yields negative results. This is how a normal market prices future risk. 5 years; to easily visualize Backwardation Vs Contango(carrying charge) markets. However, over weeks or months, the changes can be significant. Step-by-step solutions Search our library of 100M+ curated solutions that break down your toughest questions. Contango is a market condition where the prices of long-dated futures contracts are higher than the spot or nearest-term futures contract price. This upward slope—known as contango—is the opposite of backwardation. Learn the difference between contango and backwardation in the commodity markets. May 20, 2008 · The following graph shows the dramatic swing from backwardation to contango over the last 6 weeks: A few quick definitions: Backwardation is when prices in the future are lower than in the present. Discover strategies for contango and backwardation here. This is directly observable at the current time. May 24, 2019 · Backwardation was present 24% and Contango 76%. Which one shows he curve going from backwardation to a super con tango? With the spread of coronavirus, the crude oil curve went from backwardation to a super contango. A backwardation forward curve will show lower future prices and higher spot prices. Which one shows the curve going from backwardation to super contango? Instead, they fell prey to the super contango in the WTI crude oil market. youtube. Why is that? Oct 5, 2022 · When future prices are higher than current prices, and the forward curve is sloping upward, it’s called “contango”. The VIX futures curve is in contango more than 80% of the time since 2010. Jun 19, 2025 · In contango, the futures curve slopes upward, reflecting higher prices for contracts with longer maturities. Nov 26, 2021 · The oil futures curve was pummeled on Black Friday as the wave of selling sparked by the new Covid-19 variant spread beyond headline prices. Aug 4, 2021 · What is contango? Contango is a situation where a commodity’s futures contract price has decreased to converge with the actual price on the day of delivery. Contango and backwardation are terms used to describe the observed difference between the spot, or cash, price and futures prices for a commodity. These states occur when the curve exhibits characteristics of both structures across different time horizons. This situation usually happens when there is a current shortage of the commodity or a high demand that leads investors to pay more for the commodity today than in the future. ” The forward curve is a form of forecasting. Para ello tendremos que saber que un contrato de futuro deriva de un subyacente, con lo que tendremos dos precios Apr 7, 2024 · How does contango differ from backwardation? Contrary to contango, backwardation occurs when the futures price of a commodity is lower than its spot price. Which one shows the curve going from backwardation to super contango? See full list on investopedia. I understand this can happen when speculators go net long and . Distinguishing between backwardation and contango in a market is valuable for investors and traders to make informed decisions. Backwardation generally indicates immediate demand or tight supply, while contango reflects oversupply and weaker demand expectations. Sep 25, 2017 · Understand two different movements of the forward curve, contango and backwardation, and why these movements are important. However, these two curves are often confused for one another. Dec 2, 2023 · Even though convex backwardation and concave contango can be viewed as two fundamentally normal states of the futures curve, in practice, the curve is distorted by imbalances between buyers and sellers in the futures market. Horizontal axis represents a contango rate. Note that this graph does not show the forward curve (which plots against maturities on the horizontal). It can provide insights into demand predictions and influence derivative strategies. e. Apr 15, 2024 · Implications of Super Contango for Traders and Investors Super contango in the futures market can have significant implications for both traders and investors. Mar 10, 2022 · The graph below shows the VIX futures curve from a random day in early November 2021. com ***Step 3: Select the Appropriate Chart*** Looking at the charts, Chart 2 appears to be the one that shows the crude oil curve going from backwardation to super contango, as requested in the question. This often happens in markets where the asset’s supply is expected to increase or its demand is anticipated to drop. Dec 1, 2020 · 4. EquityEssentials NGO Question: The graph above shows the futures curve for a specific commodity. Normal backwardation, also sometimes called Jun 20, 2014 · En ciertos subyacentes de contratos de futuro, como son las materias primas, se suele hablar mucho de contango y backwardation, hoy vamos a explicar qué son y cómo se interpretan estas situaciones. Here we discuss top differences between Contango and Backwardation with their comparative table. What Are Contango and Backwardation? Contango and backwardation get used to describe the forward curve in commodity markets. ). “ ASSET CLASS: futures | REGION: Global | FREQUENCY: Monthly | MARKET: commodities | KEYWORD: Trading, Commodity, Calendar, Spreads I. Jun 21, 2021 · However, when googling contango and backwardation curves, I get conflicting results, with some images showing the contango curve as increasing and others as decreasing (see image 2). Feb 18, 2022 · The phenomenon of backwardation illustrates one of the reasons why oil is in short supply right now. This is an example of a market in contango. The shape of the curve can have a significant impact on returns which is why some ETFs look to mitigate the challenges by adopting a rolling strategy. In essence,a futures market expects higher prices at longer maturities and lower prices Nov 23, 2024 · Contango vs. Odd mid-curve bets and jagged structures can be red flags for hidden risks. Dec 20, 2017 · It is important to understand the curve is not static over time. Sep 5, 2024 · We want to look more closely at contango and backwardation. Mar 28, 2024 · Contango结构和Backwardation结构都是金融领域描述价格走势的术语，它们反映了期货合约价格（远期）与即期（现货）价格之间的关系。 Contango结构：现货价格<近月价格<远月价格，这种近低远高的结构，就称为contango结构。 Sep 3, 2024 · Contango is when the futures price of an asset is higher than its current spot price. This often happens when there is a great demand for the commodity, and traders are willing to pay a premium to get it now rather than wait for delivery in the future. Demgegenüber beschreibt Backwardation, dass zukünftige Lieferpreise unter dem As such, a market in contango will see gradual decreases in the price to meet the spot price at expiration. Dec 12, 2024 · A confusing case of nomenclatureThis is a specific and informative article. Carrying charge (contract prices increasing into the future) = normal, representing the costs of carrying/storage of a commodity. But traders anticipate that over longer periods, volatility could revert higher (toward its long-run average). 3 days ago · Contango and backwardation are terms used to define the structure of the forward curve. Jul 4, 2025 · Contango and backwardation might sound technical, but they show us the market’s outlook. It clearly shows an upward sloping VIX curve in contango, with the front month VIX at a low 18. In this comprehensive article, we’ll explore the definition, causes, and examples of backwardation, along with its pros, cons, and differences from contango. Sep 25, 2023 · This article discusses about Contango vs Backwardation and how they differ from each other. Backwardation vs. A commodity shortage in the spot market serves as the primary factor that creates backwardation. In this example, the price of crude oil for delivery in June 2020 was at $28. Contango (deutsch: Terminzuschlag) bezeichnet eine Situation am Terminmarkt, in der der Terminpreis eines Rohstoffs (oder auch eines Index oder einer Währung) höher ist als sein aktueller Spotpreis. later delivery contracts hit an 11-year high Sep 10, 2024 · Backwardation is the opposite of contango and occurs when the futures price of an asset is lower than the current spot price. Mar 28, 2024 · Traders use backwardation to profit by selling short at the current price and buying at lower futures prices. Oil futures Example The following table below shows a snapshot of oil futures prices from August 2023. If the slope is downward sloping because the market is expecting prices to go down, then you are “rolling up the curve” as your contract approaches maturity and increases in value. The ideas are very clear and evidently well thought out. In a backwardated market, traders expect the asset to be cheaper in the future than it is now, which is represented by a downward-sloping futures curve. backwardation The structure of the forward curve in the futures market can be described by two terms: Contango and backwardation. When a market is in backwardation, the spot and nearest-term futures prices are higher than deferred contract months. These distinctions are necessary because they tells traders which direction the futures price must move towards in the long-run. Investors must assess the reasons behind backwardation to make informed decisions. , mean reversion is the driving factor behind the slopes in both contango and backwardation)? Jul 26, 2022 · A state of contango represents the expectation that the VIX index will increase from its current level moving forward. Subscribe: https://www. Contango is different from a "Normal Contango," which occurs when the futures price exceeds the anticipated spot price. Backwardation and Contango Markets A contango market simply means that the futures contracts are trading at a premium to the spot price. Feb 28, 2018 · The first expiration month is therefore more expensive compared to the more distant one. When a futures curve is in contango, investors pay to roll futures contracts. Which one shows the curve going from backwardation to super contango? Innovative learning tools. If in contango, the forward price is higher than the spot price. Another critical consideration involves exchange-traded funds based on futures. Contango, sometimes referred to as forwardation, is the opposite of backwardation. Read on for a more detailed contango definition and an explanation of how contango works in commodity markets. Apr 17, 2020 · Commodities Corner Oil market in ‘super contango’ underlines storage fears as coronavirus destroys crude demand WTI price spread for front-month vs. Backwardation signals panic, as short-term fear dominates. Feb 22, 2022 · contango in the stock market occurs when spot prices or current prices are lower than the futures price. A contract in backwardation will increase in value until it equals the spot price of the underlying at maturity. Mar 19, 2024 · Contango and backwardation both describe the slope of a forward-facing futures curve in the futures market. Question: Knowledge Check ? 2 With the spread of coronavirus, the crude oil curve went from backwardation to a super contango. In the futures markets, the forward curve can be in either contango or backwardation. Commonly referred to as a negative roll yield, contango results in a significant drag on index performance. Apr 11, 2023 · Contango and backwardation refer to the shape of the structure of a forward curve. Keep an eye on the futures curve shape as part of your market analysis — it’s more than just a chart, it’s a signal. May 14, 2025 · In short, the VIX is “now,” and the futures curve is “where volatility is expected to go” in the future. If oil has a relatively low gravity, what are the implications? With the spread of coronavirus, the crude oil curve went from backwardation to a super con tango. Feb 2, 2023 · Crude Oil, CL Plots Futures Curve: Futures contract prices over the next 3. 01，欢迎咨询。 “Contango”和“Back”，其实就是期现升贴水的两种形态。 现货之于期货，其实就是一个超近期的合约之余相比它更远期的合约，因此现货与期货、近月和远月… Jan 10, 2024 · Find out what contango and backwardation is and what is happening in the oil market right now, with technical and fundamental analysis. Contango, on the other hand, reflects a market where futures prices increase with maturity—like an upward sloping curve from front to back. VIX Futures Curve Not Completely Back to Contango As pointed out in a recent VIX paper from the CFA Institute Research Foundation, the VIX futures curve is in contango about 80% of the time and usually goes into backwardation in distressed markets. Super backwardation is a term used in finance to describe a situation where the futures price of a commodity is lower than the spot price. com Feb 9, 2023 · The price curve rises steadily for a period of time before stabilizing and going flat again. May 24, 2018 · 各日期之间是否Contango或backwardation，没有固定规律，完全取决于市场。 天与天之间的差价 (spread)分布：各日期之间的差价分布一般没有规律可寻，差价的大小取决于市场多空力量的分布，该段时间内供需状况、突发事件、交货情况或提货情况、基金的参与等等 These factors have tended to mean that historically commodity curve strategies tend to go through periods of strong performance in the aftermath of extreme backwardation as curves normalise back into contango, and in fact some of the highest returns have been realised after periods of highly stretched backwardation such as those currently being Feb 25, 2022 · Backwardation is a fairly rare condition that occurs in commodities and futures markets where it is cheaper to buy a commodity or other asset in the future than today. If you trade futures, you’ll want to know what these curves are telling you. Contango histogram And now we can start with the contango histogram. Jul 12, 2023 · Contango and normal backwardation are two different market situations in the futures market. Mostly, the situation from day-to-day does not change radically (but it can happen). 【前言】关注老白，带你更懂期货，交所+0. Apr 12, 2022 · That could in turn push the curve into contango, a market structure that signals oversupply where prices for prompt delivery trade at a discount to those for delivery in the future. 40 and higher each month into the future going out to 240 days to expiration. Click on the Bloomberg CCRV chats on the right. What are Futures? Before delving into contango and backwardation, it’s vital to grasp what futures are. A normal futures curve will show a rising slope as the prices of futures contracts rises in time. Find out more about what this means, how it happens, and how it impacts the market. Learn more about contango vs backwardation. And similarly, the definition of backwardation is when the futures contract price of a commodity is less than I think most people in the oil markets define backwardation as future months below prompt month (downward sloping) and contango as future months above prompt month (upward sloping). Contango If prices are higher with each successive maturity date in the futures market, it's described as an upward sloping forward curve. The Aug 21, 2023 · By connecting these points, the curve’s shape—whether in backwardation or contango—reveals market expectations about future supply and demand, the cost of carry, interest rates, and other factors. Contango and backwardation show how futures prices relate to expected spot prices at different points in time. Nov 6, 2024 · Backwardation and contango are essential concepts in the crude oil market, each reflecting unique market expectations and economic conditions. Commodity speculators and hedgers are always watching the shape of the futures curve - specifically if the futures markets are in contango or backwardation. After presenting the definitions for reference, we look at how they can affect trading strategies. Contango describes the structure of prices in the market across the time horizon, and is most often associated with commodities and futures markets. dnj hqxg uvhvqm sbvm nvy opzc kytabk mamqg zhevtaa vdjzht