Contango


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Related to Contango: Backwardation

Contango

A market condition in which futures prices are higher in the distant delivery months.

Contango

A situation in which the futures price for an asset is higher than the expected future spot price. The futures price in contango declines to the future spot price as the futures contract approaches maturity. See also: Backwardation, Keynesian economics.

contango

In futures or options trading, a market in which longer-term contracts carry a higher price than near-term contracts. The premium accorded to longer maturities is a normal condition of the market and reflects the cost of carrying the commodity for future delivery. Compare inverted market.

Contango.

The price of a futures contract tends to reflect the cost of storage, insurance, financing, and other expenses incurred by the producer as the commodity awaits delivery.

So, typically, the further in the future the maturity date, the higher the price of the contract. That relationship is described as contango.

If the opposite is true, and the price of a longer-term contract is lower than the price of one with a closer expiration date, the relationship is described as backwardation.

contango

  1. an additional payment made by an investor or speculator who has purchased or sold a SHARE, STOCK etc. on the UK STOCK MARKET in return for being permitted to carry over the settlement of the share transaction from one ACCOUNT PERIOD to the next.
  2. a condition in a FORWARD MARKET where the most distant delivery months trade at a premium to the near term delivery months.
References in periodicals archive ?
The ETF United States 12-Month Oil (USL) attempts to reduce the risk of contango by purchasing contracts over a 12-month period.
The contango between futures prices in the fourth quarter of 2016 and the average of 2017 has shrunk from $3.75 per barrel in December to $2.50 at the end of February and just $1.65 in recent days.
In short, contango exists when the future price of oil is higher than the current or spot price.
Additionally, we increased our crude oil storage during the quarter to be in a position to take advantage of a widened contango market structure in the third quarter, which is expected to provide strong earnings in the second half of the year.
IDGLOBAL said it is forced to identify creative outlets to secure potential acquisitions while the price of crude is still depressed from earlier highs in order to capitalize on the current contango curve in the oil futures.
of Dallas has signed an agreement with Contango Operators, Inc.
This situation creates a contango market (a market when every future month is higher than the previous month's value." Every storage facility in the New York Harbor is full of product.
The movement of passive investors into commodities shifted markets from backwardation to contango, the condition that occurs when futures prices exceed cash prices.
Other investors in the project include Contango Capital Biofuels Partners LP, Galveston Bay Biodiesel Management LLC, Sultex LLC, Mobius Risk Group LLC, and Beaver Creek Fund, Ltd.
According to Protonex, the financing was led by existing investors Conduit Ventures, Ltd., SAS Investors, Solstice Capital and Commons Capital, as well as new investors Parker Hannifin Corporation, Contango Capital Management and the Massachusetts Green Energy Fund.
(RAQ201) KENNETH PEAK - CONTANGO OIL & GAS COMPANY (MCF).