commodities - future/spot prices; book5, pg 52
I couldn’t get the rationale behind this logic - kindly break it
“Production may occur only if futures prices are below the current spot price, which is associated with a downward-sloping term structure of futures prices.”
Producers increase production if the futures price is high (one of the many reasons for increasing production, other could be on supply/demand). is that wrong? future price has to be less than spot, for production?
TY. |