contract price of distant month = spot price+inventory fee

Therefore, the price of distant month is often higher than that of recent month, that is, the premium of distant month to recent month. In this case, the market is called positive market. However, there are exceptions. For example, at present, many varieties have higher prices in recent months and higher prices in distant months, which is called a reverse market.

the reason for the reverse market is that the relationship between supply and demand is tight in the near future, but it is expected that the relationship between supply and demand will be eased in the long term.

Three situations:

1. There is not enough old grain in the market, but new grain will be listed soon.

2. The supplier's destocking efforts exceeded market expectations.

3. when the inventory of the current year is used for the next year's delivery, it will be discounted by grades.