In the formula for all the forward contract valuations you have to add the future cost and subtract out the benefits. Just trying to understand the logic behind that?
SHould the value increase because you’re going to receive a dividend? It’s like an added benefit…
You subtract the benefit because the forward/future doesnt receive the benefit.
Generally, the FV = Spot + Cost - Benefit + some interest
The basic idea is that if you are long a forward, then you are foregoing holding the underlying at least until expiry of said forward. So if you are avoiding costs that current holders of the underlying pay (such as storage costs), then the forward price should be higher to reflect that. Basically you’ve avoided a cost, so the forward prices it in instead.
Conversely, if holders of the underlying receive a benefit (like bond coupon payments), investors in forwards are foregoing that benefit, which is compensated via a lower forward price.
Does that clear up your confusion?