Commodity Futures

CFA Level II
#1

Hi, This is probably a very basic question, but the return of a commodity futures confuses me.

Let’s say I am long a Commodity future:

  • My thought process is originally that since I am “Long” I want prices to go up.

In the book they refer to a positive return component from a lower future price. I understand the argument that I will be able to roll over into the same position at a lower price ( Since I am selling out my holding and buying back in at a lower price. So to summarize my question, if I am long a commodity future, do I want the price to go up or down?

#2

If you are long you always want the price to go up!

When you roll over you would want to roll over at a lower price of course as you are buying again, but if you are going long then you hold the view tha the commodity will go up even further. So the negative roll yield is irrelevant at this point.