Commodities

This one handles commodity markets with a focus on the stuff that actually matters: futures curve dynamics, roll yield, and why your commodity ETF returns don't match the spot price movements you see on TV. It breaks down contango and backwardation mechanics, walks through the three components of commodity returns (spot, roll, collateral), and covers the major indices like GSCI and BCOM. The worked examples are solid, showing how brutal roll yield can be in steep contango. Use it when someone asks about oil prices, gold as a safe haven, or why their commodity fund underperformed despite prices going up. The cost-of-carry model and convenience yield formulas are all here if you need the theory.

skills.sh installs: 811
GitHub stars: 224
last updated: Aug 21, 2026

View on GitHub

Install

$ npx -y skills add joellewis/finance_skills --skill commodities --agent claude-code

Installs into .claude/skills of the current project.

Files

Commodities

Core Concepts

Spot vs Futures Pricing

The futures price is related to the spot price through the cost-of-carry model:

F = S × e^((r + u - y) × t)

where S = spot price, r = risk-free rate, u = storage cost, y = convenience yield, t = time to expiration. The convenience yield represents the benefit of holding the physical commodity (e.g., avoiding production shutdowns).

Contango

When F > S, the futures curve is upward-sloping. Storage costs and financing costs exceed the convenience yield. Contango creates negative roll yield because investors must sell cheaper expiring contracts and buy more expensive later contracts. Contango is common in well-supplied markets and for storable commodities like oil and natural gas.

Backwardation

When F < S, the futures curve is downward-sloping. The convenience yield exceeds storage and financing costs, often due to near-term supply scarcity. Backwardation creates positive roll yield because investors sell expensive expiring contracts and buy cheaper later contracts. Backwardation is common in tight supply environments.