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Backwardation and Contango

This video provides a quick review of the concept of contango and backwardation. These two are opposite of each other.

A market is said to be in Backwardation, when the prices of a futures contract is trading below the expected spot prices at the contract maturity.

A market is said to be in Contango, when the price of a futures contract is above the expected spot price.

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Course: Commodity Markets
LESSONS
  • Defining Commodities
  • Commodity Markets - Types of Commodities
  • Commodity Traders and Future Value
  • Types of Markets for Commodity Trading
  • Commodity Markets: Price Discovery, Price Risk Management and Regulation
  • Regulation of Commodity Markets
  • What is Contango?
  • What is Backwardation?
  • Backwardation and Contango

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