The spot month period is specific to each commodity contract, need not correspond to a month-long period, and may extend through the period when delivery obligations are incurred.

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The classic commodity option is a contract that gives the buyer the right, but not the obligation, to buy or sell something at a particular price.

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In February this year, we also launched the black pepper future, which was the first futures contract for the commodity.

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When backwardation happens, the future contracts of a commodity are actually priced lower than the price of the current month contract at the time of sale, and the investor (or ETF) can benefit by selling the current month high and buying the next month lower.

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One last possibility: You are using commodity futures to hedge risk-for example, on taking a consulting contract for which you will be paid in British pounds.

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Like Taibbi, Kaufman traces the beginnings of the increased commodity price volatility to 1991, presumably when the CFTC granted Goldman the exemption from the 5000 contract speculative limit in the commodities futures markets.

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