Contango

Business / Taxes / Contango: The price of a futures contract tends to reflect the cost of storage, insurance, financing, and other expenses incurred by the producer as the commodity awaits delivery. So typically the further in the future the maturity date, the higher the price of the contract. That relationship is described as contango. If the opposite is true, and the price of a longer-term contract is lower than the price of one with a closer expiration date, the relationship is described as backwardation.

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