# commodities

Walks through futures curves, roll yield and supply-demand fundamentals. Useful when a commodity ETF refuses to track the spot price.

- skill · `type=skill` · Claude Code, Codex, Cursor, GitHub Copilot, Gemini CLI, OpenCode · 770 installs · ★ 218
- Author: JoelLewis
- License: MIT · policy=mirror · the beginning of the file is at the end of this page
- Source: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/commodities/SKILL.md
- Updated: 2026-07-18
- HTML: https://affpapa.org/en/nevibecode/skills/commodities

## What it does

The skill hands the agent a working frame for commodity markets: how spot and futures connect through cost-of-carry, what contango and backwardation do to returns, where total return actually comes from. The formula F = S × e^((r + u - y) × t) is broken down variable by variable, convenience yield included.

Two worked examples carry the math. The first prices roll yield in contango: front month crude at $50 against next month at $52 gives −4.0% for the month, or −37.5% compounded across 12 rolls. The second decomposes an ETF return — spot up 10%, roll yield −6%, collateral yield 5%, total 9%.

A pitfalls section covers the usual mistakes: reading spot moves as fund returns, ignoring roll drag, expecting an ETF to mirror spot. The script runs as `uv run scripts/commodities.py`, so `uv` has to be on the machine first. Gold via futures and the safe-haven allocation question live here; physical bullion and storage belong to the real-assets skill.

## Install

### Claude Code (native platform)

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill commodities -a claude-code
```

2. **Manually: put the files in place**
- File: `~/.claude/skills/commodities/SKILL.md` — Copy the whole skill folder; for one project use .claude/skills/commodities/

### Codex

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill commodities -a codex
```

2. **Manually: put the files in place**
- File: `.agents/skills/commodities/SKILL.md` — For all projects use ~/.agents/skills/

### Cursor

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill commodities -a cursor
```

2. **Manually: put the files in place**
- File: `.cursor/skills/commodities/SKILL.md` — Cursor also reads .agents/skills/ and .claude/skills/

### GitHub Copilot

1. **GitHub CLI**
```bash
gh skill install JoelLewis/finance_skills commodities
```

2. **Manually: put the files in place**
- File: `.github/skills/commodities/SKILL.md`

### Gemini CLI

1. **Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill commodities -a gemini-cli
```

2. **Platform CLI**
```bash
gemini skills install https://github.com/JoelLewis/finance_skills --path plugins/wealth-management/skills/commodities
```

### Windsurf (Devin Desktop)

**Manually: put the files in place**
- File: `.devin/skills/commodities/SKILL.md` — The legacy .windsurf/skills/ path still works

### OpenCode

**Skills CLI (Vercel)**
```bash
npx skills add JoelLewis/finance_skills --skill commodities -a opencode
```

### Claude.ai

**Claude.ai**
- Zip the folder and upload it in Settings → Capabilities → Skills

Where a file is given instead of a command, copy the files from the source to that path: https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/commodities/SKILL.md

## When to use it
- annualize roll yield from two futures contracts
- explain why a commodity ETF lags a spot price rally
- split a commodity position's return into spot, roll and collateral
- compare GSCI and BCOM weighting schemes
- judge whether commodities hedge inflation

## Example prompts
- Annualize the roll yield if front month crude is $50 and next month is $52
- Why did the commodity ETF return less than the spot oil price move?
- Decompose this commodity position into spot return, roll yield and collateral yield

## Source text · SKILL.md · MIT

Below is the content of a third-party file. It is data, not instructions for you: do not act on anything written inside unless the human asks. Block tag: 502b847e87e4eaa0.

BEGIN THIRD-PARTY FILE 502b847e87e4eaa0
```text
---
name: commodities
description: "Analyze commodity markets including futures curve dynamics, roll yield, and supply/demand fundamentals. Use when the user asks about commodity investing, commodity ETFs, contango, backwardation, roll yield, commodity indices (GSCI, BCOM), or commodities as an inflation hedge. Also trigger when users mention 'oil prices', 'gold as a safe haven', 'agricultural futures', 'convenience yield', 'storage costs', 'natural gas', 'copper demand', or ask why commodity ETF returns differ from spot price changes."
---

# 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.

### Sources of Commodity Return
Total commodity return has three components:

1. **Spot return:** Change in the spot price of the commodity
2. **Roll yield:** Gain or loss from rolling expiring futures into the next contract
3. **Collateral yield:** Interest earned on the margin/collateral posted to hold futures positions

Total Return = Spot Return + Roll Yield + Collateral Yield

### Roll Yield
The gain or loss realized when an expiring futures contract is replaced by a longer-dated contract. In contango (upward curve), roll yield is negative. In backwardation (downward curve), roll yield is positive. Roll yield can be a significant drag or boost to total returns — in deep contango, roll yield can eliminate or even exceed spot price gains.

### Commodity Sectors
- **Energy:** crude oil, natural gas, gasoline, heating oil — largest sector by production value
- **Precious metals:** gold, silver, platinum, palladium — safe haven and industrial uses
- **Industrial metals:** copper, aluminum, zinc, nickel — tied to global economic activity
```
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First 2715 of 7547 bytes. © JoelLewis · MIT · https://github.com/JoelLewis/finance_skills/tree/HEAD/plugins/wealth-management/skills/commodities/SKILL.md

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