What contango, backwardation mean to commodity traders - The Hindu BusinessLine
What contango, backwardation mean to commodity traders Bavadharini KS BL Research Bureau | Updated on April 24, 2021 × Contango and backwardation are two common terms that investors and traders in commodities markets often hear. Understanding them helps gauge the price, demand and supply in the market for a particular commodity. A trader or investor refers to a market condition for a commodity as contango when the futures price (for that commodity) is trading at a premium to spot price. This difference can arise as futures contract accounts for the spot price plus the cost of carry, storage ...