Contango

Contango is a market condition in which the futures price of a commodity or financial instrument is higher than the expected spot (current) price at the contract's expiration. This typically occurs when the cost of carrying (storage, insurance, financing) an asset through the futures period exceeds the expected price change. Contango is the normal state for most commodity futures markets. Investors in commodity ETFs must be aware of contango as it creates a negative roll yield—eroding returns when futures contracts are rolled over at higher prices.