Futures Curve
The graph of futures prices across successive delivery months for a commodity, revealing whether the market is in contango or backwardation.
The futures curve plots the prices of futures contracts with the same underlying commodity across increasing expiration months. Its shape tells traders critical information about supply-demand expectations and storage economics.
An upward-sloping curve (higher prices for deferred months) is contango — the normal state for storable commodities. A downward-sloping curve (higher prices for near months) is backwardation, signalling tightness in the physical market.
The curve can be kinked, humped, or mixed — for example, the front end in backwardation while the back end slopes gently upward. Spread traders systematically exploit distortions in curve shape.