Forward curve

The forward curve is the set of prices for a commodity's futures contracts across all traded delivery months, plotted from nearest to furthest.

Plot the price of every traded delivery month for a commodity against its date, and the line connecting them is the forward curve. Its shape tells a story about the physical market: a curve sloping upward, contango, usually signals ample supply and low urgency, while a curve sloping downward, backwardation, signals a market that needs supply without delay.

The curve is not fixed; it can be flat, humped around a particular month tied to seasonal demand, or kinked around a known event like a planting or harvest date. Traders read changes in the curve’s shape, not just its level, as a signal about how the physical balance is expected to evolve. Anyone holding a futures position across multiple contract months experiences the curve’s shape directly through roll yield each time a position moves from the front month to the next. See contango and backwardation.