Cash prices are the prices for which the commodity is sold at the various market locations. The futures price represents the current market opinion of what the commodity will be worth at some time in the future. Under normal circumstances of adequate supply, the price of the physical commodity for future delivery will be approximately equal to the present cash price, plus the amount it costs to carry or store the commodity from the present to the month of delivery. As a result, one would ordinarily expect to see an upward trend to the prices of distant contract months. These costs, known as carrying charges, determine the normal premium over cash,and create a market condition known as contango which is typical of many futures markets. In most physical markets, the crucial determinant of the price differential between two contract months is the cost of storing the commodity over that particular length of time. As a result, markets which compensate an individual fully for carrying charges — interest rates, insurance, and storage — are known as full contango markets, or full carrying charge markets. Under normal market conditions, when supplies are adequate, the price of a commodity for future delivery should be equal to the present spot prices plus carrying charges. The contango structure of the futures market is kept intact by the ability of dealers and financial institutions to bring carrying charges back into line through arbitrage.
Search
Blog Archive
-
▼
2011
(444)
-
▼
October
(16)
- Hot and sensual actress MAHIMA CHAUDHRY's biography
- Andhamaina Akka
- Jagga Naatu Dengudu
- Super Aunty Tho Dengudu
- Boss Tho Denginchukunaa Rubhi
- Ame Puku,Banthulu Abbaaa
- Aunty Tho Ranku
- The pretty actress KIM SHARMA's biography
- Nenu Exam Pass Aiyyanu
- Madhavi Puku Tho AA Rathri
- Tailor Shop Vaadu Naa Ranku Mogudu
- Ramesh Sangathi Vadhina Maridhi Pukulata
- Vadhina Kutha Paina Ice Cream
- Mallitho Dengudu
- Sarala Aunty Puku
- Exquisite KAJOL MUKHERJEE's biography
-
▼
October
(16)
0 Comments Received
Leave A Reply