The price at which a commodity or a financial instrument (a derivative) for immediate delivery is selling at a specific time and location/ market. It is the price (market value) at which market participants transact for instant delivery of the underlying- i.e., at the time of the exchange of countervalues in the present time, without deferment to a future date. In commodities markets, the spot rate is the price for a commodity that will be traded “on the spot”- that is, now and with immediate effect.
This is opposite to a forward price that represents the price set for a transaction that will take place at a prespecified future date. The relationship between spot price and forward price is established taking into account the so-called cost of carry:
Forward price = spot price – cost of carry
