Plain-language definitions of 133 terms used in raw material trade: Incoterms, payment, shipping, customs, quality documents, plastics, metals, chemicals, agriculture and energy.
Terms describing futures prices relative to the spot price. In contango, deferred prices are above spot, usually reflecting ample supply and the cost of carry – storage, financing, insurance – which makes holding stock and selling forward attractive. In backwardation, spot is above futures, signalling a tight market where prompt material is scarce and pushing buyers to secure supply quickly. The shape of the curve is an important signal for raw material stock policy and contract timing.
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