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Commodities Briefing - Categorized | Futures and Options, Trading more

The importance of storage rates in commodity trade

Posted on 08 May 2014

Commodity futures market convergence is the process where prices in the spot and futures markets come together or converge at futures market expiration. Convergence occurs at the expiry date of every futures contract because of arbitrage. If spot prices remain below futures prices, a market participant could buy in the spot market and sell in the futures market and make a risk-free profit.
Similarly, if the spot price is above the futures price, a market participant can buy in the futures market, take delivery and sell in the spot market and earn a risk free-profit………………………………………..Full Article: Source


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VRS - who has written 37214 posts on Opalesque Commodities Briefing.


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