1. A situation in futures or commodity markets where the price of a contract for future delivery is higher than the spot price (current price), typically reflecting storage costs and interest rates.
Usage: finance; commodities trading

Examples

• The oil market is in contango, with future contracts trading at a premium to current prices.
• Investors must account for contango when rolling over futures positions to avoid losses.
• A steep contango can make it expensive to store physical commodities for future delivery.
• The contango structure of the wheat market reflects the cost of financing inventory.
• When contango is present, traders may find it unprofitable to arbitrage between spot and futures prices.