As a commodity futures contract nears expiration, the futures price converges to the spot market price for that commodity.

Question

Quizplus · Accepted Answer

This is known as the "convergence" of futures and spot prices, where the futures price eventually equals the spot price at the time of expiration. This is due to traders arbitraging between the two markets, buying low in the futures market and selling high in the spot market.

As a Commodity Futures Contract Nears Expiration, the Futures Price