Commodity

Backwardation

. In the world of finance, the concept of futures market can be quite complex. A key aspect to understand is how prices of commodities are affected in this market. When a commodity is in short supply, the near month contract will be sold at a higher price, while the distant month contract will be sold at a lower price. This is due to the spot price of the commodity being higher than the forward price. Essentially, this reflects the current demand and scarcity of the commodity. It's important to keep this in mind when making decisions in the futures market.

Related terms

Commodity Exchange

Understand the meaning and definition of Commodity Exchange in the context of stock market, trading, and investments.

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Commodity Index

Understand the meaning and definition of Commodity Index in the context of stock market, trading, and investments.

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GNP

Understand the meaning and definition of GNP in the context of stock market, trading, and investments.

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Closing Price

Understand the meaning and definition of Closing Price in the context of stock market, trading, and investments.

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Commodity Pool

Understand the meaning and definition of Commodity Pool in the context of stock market, trading, and investments.

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