There is a limit to the premium of futures. The price of forward futures cannot be infinitely higher than that of spot and near-term futures. The premium rate of futures is also called "position fee". The upper limit of "position fee" = interest+storage fee+insurance fee+other expenses.
The upper limit of "position fee" refers to the fees borne by traders who buy recent futures (including spot) and deliver them at maturity, and hold the goods until the forward futures are delivered at maturity. Under normal circumstances, it is difficult for futures premium to break through the upper limit of "position fee". Because if the upper limit is broken, someone will buy near-term futures and sell far-term futures. In this way, he can still make a profit after paying interest, storage and insurance fees. The motivation to buy near-term and long-term and the pressure to sell long-term will soon force the price relationship between near-term and long-term into a normal track. Generally, futures premium is always lower than the upper limit of position fee.
The lower limit of "position fee" = interest fee (calculated according to the standard of normal market interest rate) is not difficult to understand. When the futures premium is less than the lower limit of "position fee", merchants will sell their stocks to buy futures, thus earning the difference between interest and futures premium.
In most cases, the futures market is characterized by futures premium, but the premium can easily exceed the lower limit of the "position fee" and even make the "position fee" negative, that is, the market has changed from futures premium to futures premium.
Futures discount is generally caused by the shortage of spot market. This shortage is caused by real market demand factors, such as sudden shutdown and transportation difficulties. Or maybe it's because in the falling market, short covering bought a lot of expired positions. The discount of general futures will not change immediately because of the operation of selling spot and buying futures.
Futures premium and discount are different from market ups and downs. Futures premium does not necessarily mean that the market is a bull market (upward trend), and futures premium does not mean that the market is a bear market (downward trend). Futures premium and discount refer to the relationship between market forward futures and recent futures prices. The rise and fall is the rise and fall of the overall market price level, including spot, near-term futures and forward futures.
Finally, it should be pointed out that the premium and premium of futures are not evenly distributed between months. Below the upper limit of "position fee", premiums and premiums are also on the market. Sometimes it even happens that futures in some months are premium, while futures in other months are discount.