Commodities are typically the products which are extracted out of natural resources in short supply on earth.
Typically, there are different types of commodities which are popularly acceptable as tradable with a time value across the global markets.
The traders in commodity markets for different commodities are of two types.
There are several kinds of markets where the commodities are traded. Typically, the commodities which are meant to change hands physically for use in daily life like agricultural commodities are traded over the counter where the buyers and sellers meet to decide the price. These are usually the spot markets, where instant cash is used […]
Futures contracts in commodity markets perform two important functions of price discovery and price risk management with reference to any commodity-irrespective of the fact whether it is a base metal, precious metal or agri-products or even crude oil/ any other form of energy. It is useful to different segments of economy. A seller can get […]
With the maturity of commodity markets in different parts of the world, the size of daily trading across commodity market platforms has risen substantially with time over the past two decades. This article explains the regulation of commodity markets in US and India. In India, ever since the inception of MCX and NCDEX nearly two […]
A market is said to be in Contango, when the price of a futures contract is above the expected spot price. As the time passes and the delivery approaches, the futures price will converge to the spot price. In commodity markets, the reason for contango could be the cost of storage and insurance of the […]
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. The futures curve in this case will be downward sloping. If we are talking about oil, it means that it will be more expensive to buy oil today than […]
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 […]