Contago is a situation where the futures contract prices are higher than the spot price. The holder of a futures contract will benefit from any gains in the price of the underlying. The gain can be realised either by selling the commodity after taking delivery on expiry of the futures contract, or by selling the futures contract. In a well-integrated market, Contago is equal to the cost of carry, i.e. interest rate on investment, loss on account of loss of weight etc.