Storage economics can help explain the relationship between two grain futures months. It is context for a spread, not a fixed rule that guarantees a price.
What a carrying market expresses
When nearby supplies are ample, a deferred contract can trade above a nearby contract. Storage, financing, insurance and delivery economics can contribute to this difference. The maximum economically relevant carrying relationship depends on contract rules and prevailing costs; it is not one universal number for every commodity or date.
Read the sign convention
If the chart is near − deferred, a deferred premium appears as a negative spread. If the chart uses deferred − near, the same market appears positive. Always read the leg labels and direction before interpreting “widening” or “narrowing.”
Why an inverse can appear
When immediate supply is valued more highly, a nearby contract may trade above a deferred one. This can reflect current scarcity, delivery constraints or urgent demand. An inverse is not proof of one specific shortage; compare cash, inventories, delivery rules and current market information.
Where seasonality fits
Harvest and consumption cycles can influence storage incentives, but regimes change. Compare the selected calendar pair across years, inspect the starting curve in each year and note whether the market began in carry or inversion. A historical average can blend unlike conditions and conceal the reason the relationship changed.
Research the exact spread
Compare dated legs, historical years and current market conditions before using an average curve.
Open Futures Spread Analyzer →Frequently asked questions
Is contango equal to full carry?
No. Contango means deferred prices exceed nearby prices. Full carry additionally requires comparison with the relevant carrying costs.
Does an inverted curve always reverse?
No. A strong nearby premium can persist or widen; historical reversion is not a limit on future risk.
Exchange references
Confirm current specifications, listed combinations and margins with the exchange and broker.
Continue the Calendar Spread Trading series
Also see Calendar Spread Trading, Intercommodity Spreads and Butterfly Spreads.
Test the structure yourself
Inspect individual years, trading windows and the full basket before making a decision.
Explore the Analyzer →Educational material only, not investment advice. Illustrative examples exclude trading costs unless stated. Historical results do not guarantee future performance.