Answer: higher than the spot price.

## Explanation Contango is a term used in commodity and futures markets to describe a situation where futures prices are **higher than the spot price**. This is the opposite of backwardation, where futures prices are lower than the spot price. ### Key Points: 1. **Contango Definition**: A market is in contango when the futures price for a commodity is higher than the expected future spot price, or more commonly, when futures prices are higher than the current spot price. 2. **Market Structure**: Contango typically occurs when there are costs associated with storing the commodity (storage costs, insurance, financing costs) and when there is ample supply. 3. **Term Structure**: In contango, the futures curve is upward sloping, meaning prices increase as the delivery date moves further into the future. 4. **Implications**: Contango can create a positive cost of carry and may lead to negative roll yields for investors who need to roll over their futures positions. Therefore, the correct answer is **C: higher than the spot price**.

Author: LeetQuiz .