The price difference refers to the futures price difference of different grades, different delivery months, different commodities and different delivery locations. It also refers to the price difference of the same commodity due to various conditions, such as wholesale and retail price difference, regional price difference and seasonal price difference. The difference between buying and selling goods is the main part of some businessmen's profits.

The reasons for the price difference are complicated. For example: different geographical environment, different supply and demand, different cultures, etc. And mastering the law of price difference seems to be a necessary condition for businessmen to make profits.

Extended data

The price difference sometimes manifests itself as a premium and sometimes as a discount. Hedging is a way of trading in the market by using the price difference between futures contracts. The key factor of arbitrage is the change of price difference.

The spread can be widened or narrowed, but when the spread between two futures contracts becomes abnormal, it provides an arbitrage opportunity for traders. The difference in price is related to profit. The real challenge for arbitrageurs is to capture the maximum spread in the same direction.

For cross-month arbitrageurs, when the spread is greater than the holding cost of the amount, it is a good trading opportunity; For cross-market arbitrageurs, this difference is affected by transportation costs and the types and grades of goods clearly stipulated by various exchanges. For cross-commodity arbitrageurs, it is important to understand the "normal" price difference relationship between two related commodities in order to take advantage of the opportunity of higher or lower "normal" price difference.