Contango

Contango describes a situation regarding prices of commodity futures. In contango the futures price is above the expected spot price at maturity / expiration of the deadline month (delivery date in the future), which is a normal market. The futures curve is therefore typically upwards (downwards backwardation would be ) addressed, since the futures contracts thus at higher prices - are traded - due to storage costs.

Storage costs - the total cost of storage of a commodity from storage fees on insurance costs to interest and loss - are a big reason why commodity futures are traded with delivery date in the future at a higher price than the current time. If these costs are the reason of such a price situation, commodity traders say that the futures contracts are traded with contango.

The opposite of contango is backwardation.

• Futures