Commodity Forwards and Futures - FRM Part 1 2025 - Book 3 - Chapter 11

Learn about commodity forwards and futures in this 54-minute comprehensive video lecture designed for FRM Part 1 2025 exam preparation. Master the fundamental differences between commodities and financial assets, explore key commodity concepts including storage costs, carry markets, lease rates, and convenience yields. Understand the various factors influencing prices across agricultural commodities, metals, energy, and weather derivatives markets. Gain practical knowledge in pricing commodity forwards, executing arbitrage transactions, and calculating potential profits. Explore the cost of carry model, learn to create synthetic commodity positions, and understand the relationship between forward prices and expected future spot prices. Delve into the impacts of systematic and nonsystematic risks on futures pricing, while mastering concepts like normal backwardation and contango. The lecture includes detailed examples and step-by-step explanations, making complex topics accessible for financial risk management professionals.