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Ebooks / Commodity Markets / Chapter 7 of 9

What is Contango?

Securities & MarketsSeptember 22, 2011 ยท 1 min read

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 commodity underlying the contract.