What Is the Spot Delivery Month?

In the commodities futures markets, the spot delivery month is the earliest possible month in which the commodity underlyingღ the futures contract will be deliverable. It is also known as the nearby month or front month.

The opposite of the spot delivery month is the 澳洲幸运5官方开奖结果体彩网:back month, which refers to the latest month in which the comm🌸꧃odity can be delivered based on current trading.

Understanding the Spot Delivery Month

The commodities futures market is a large and important part of the modern financial markets. Through this marketplace, commercial customers who rely on 澳洲幸运5官方开奖结果体彩网:commodities in their operations can efficiently source supplies and plan ahead for future months of production. At the same time, financial buyers can use the commodities futures market to 澳洲幸运5官方开奖结果体彩网:speculate on commodity prices or to engage in other activities such as 澳洲幸运5官方开奖结果体彩网:risk hedging.

When a trader buys a commodities 澳洲幸运5官方开奖结果体彩网:futures contract, they are taking on the obligation to receive a specific amount of the commodity in that contract’s delivery month. Likewise, the seller of the contract takes on the obligation to physically deliver that commodity. As the delivery date nears, futures💫 traders who do not actually want to receive or physically deliver the commodity can unwind their position by buying or selling offsetting positions. If they d𝓀o not do so in time, they may be required to make or take delivery of the commodity.

The spot delivery month is the most important month in any commodity futures market because it is used to determine the 澳洲幸运5官方开奖结果体彩网:spot price of that commodity. Since the spot delivery month is the one closest to the present, it is the most recent month from the perspective of buyers and sellers who wish to unwind their positions in order to avoid making or taking physical delivery. For that reason, commodities exchange regulators such as the 澳洲幸运♑5官方开奖结果体彩网:Commodity Futures Trading Commission (CFTC) pay close attention to the trading activity in the spot delivery month, restricting trades to prevent excessive speculation or 澳洲幸运5官方开奖结果体彩网:price distortions.

Real World Example of a Spot Delivery Month

To illustrate, consider the case of orange juice futures contracts. The delivery months for these contracts are in February, March, May, July, September, and November. By contrast, futures contracts for heating oil can be written to expiඣre in any month of the year. 

Therefore, in the case of a trader who purchases an orange juice futures contract in January, the spot delivery month would be February.𝕴 In the case of heating oil futures, a trader who purchased their contract after the delivery date in November would have December as their spot delivery month.