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Commodity intelligence Advanced 2 / 5

Read forward curves and term-structure factors

Updated 4 August 2026 · 2 min read · 14 Contents

Plain-language meaning

A forward curve orders compatible contract prices by expiry. Its slope and curvature summarize the observed term structure; they do not predict the next price.

Why it is useful #

Curves expose calendar structure that a single front-month quote hides and make input consistency inspectable.

Where it appears and the workflow #

In Commodity Intelligence, enter a valuation date, positive spot reference, unit and at least two observed dated quotes. Review observed nodes separately from interpolated month ends.

Calculation or source #

Observed quotes are preserved exactly. Month ends use log-linear interpolation. Annualized carry is ln(F/S) divided by year fraction; level, slope and curvature come from a log-price polynomial fit.

Prerequisites, inputs, period and unit #

Every quote must share product specification, currency and unit. Expiries must be unique and after the valuation date. No provider values are inserted.

Worked example #

With spot 100, a three-month quote 102 and six-month quote 105, the curve is upward sloping; interpolation can estimate a display node between them while keeping 102 and 105 unchanged.

What high and low mean #

A higher far price produces positive slope under this convention; stronger curvature means the slope changes across expiries, not that price must accelerate.

Positive, negative and zero #

Contango, backwardation and flat are descriptive signs. Zero slope is a measured flat fit; an absent fit remains unavailable.

Unavailable values #

Fewer than two valid quotes, duplicate expiries or non-positive values make the calculation unavailable.

Limitations and common mistakes #

Interpolation is not a tradable quote. Contract rolls, seasonality, delivery optionality, liquidity and mismatched specifications can dominate a simple factor summary.

Market-specific differences #

Expiry calendars, settlement and contract specifications vary by venue; curves from different products must not be spliced.

Related terms #

Related terms: near and far contract, spot and futures, contract multiplier, commodity storage and transport.

Suggested next steps #

Next, verify contract specifications and compare the calculated carry with a separately entered storage/carry scenario.

Educational use only #

This guide explains descriptive research evidence. It is not investment advice, a price prediction, a recommendation, a claim of predictive accuracy, or an instruction to buy, sell, rebalance or place an order.

Educational information only; not investment advice or an order service.
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