Contango
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Contango is a technical term employed by the London Stock Exchange. It is almost the opposite of backwardation.
- The apples at the market are cheaper than the apples at the tree
In finance, a Futures Contract is an agreement between buyer and seller where the Seller agrees to deliver an agreed upon quantity of a commodity at a Future date usually a standard date, agreed upon between buyer and seller at the agreed price. This trade generally occurs on a commodity market. In the case of most commodities, such as Gold or live cattle, the seller has built-in costs incurred to feed, store, insure and maintain the commodity between the trade date and the delivery date. This premium will decrease as the time between the trade date and the delivery date becomes shorter.
The condition in which the distant price is higher than the immediate Spot Price due to this added premium is called the Contango.
Indepth article on Contango and Backwardation (http://www.fenews.com/fen35/back_to_basics/back_to_basics.htm)