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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

Warehouse Receipt

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

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Spot Commodity

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

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Approved Warehouse

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

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MSCCGMF

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

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NBOT

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

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