A market condition in which futures prices are higher in the distant delivery months. Bloomberg Financial Dictionary
————
A term used in the futures markets to describe the situation when the spot or nearby prices (cash prices) are lower than longer term prices (futures prices). The opposite of backwardation. Sometimes such markets are said to be at a premium. Dresdner Kleinwort Wasserstein financial glossary
————
( i) On the London Stock Exchange, a mechanism for detailing settlement of a bargain until the next account day. This mechanism is used when the selling party is unable to deliver the stock for the appropriate account day. The selling party pays an interest premium to the buyer to cover the extended settlement period. On futures markets, a market in which distant months sell at a premium over near months.
(ii) In futures markets a situation in which prices are progressively higher in the succeeding delivery months than in the nearest delivery month. Exchange Handbook Glossary
* * *
contango con‧tan‧go [kənˈtæŋgəʊ ǁ -goʊ] noun [uncountable]
FINANCE a situation in which the price for Commodities (= oil, metals, etc) being traded is lower for immediate delivery than it is for future delivery:
• The market was in contango - the price for metal for three-month delivery was $24 a tonne above that for immediate delivery.
* * *
A situation where futures prices are progressively higher the further the maturity date is from spot. The increase reflects the added cost of storage and insurance for commodities delivered further into the future. Contango is the normal relationship between spot and futures price and is the opposite of backwardation.
► See also Futures, Backwardation.
* * *
contango UK US /kənˈtæŋɡəʊ/ noun [U]
► FINANCE, STOCK MARKET a situation in which the price of a commodity (= a product such as oil or a metal that is traded in large quantities) is higher if the buyer is to receive the commodity at a future date than it is if the buyer receives it immediately: »
The price slump would create conditions of contango, where massive current supply puts the spot price below the futures price.
»Much of the commodity market is at present in contango.
Financial and business terms. 2012.