1A situation in which the spot or cash price of a commodity is higher than the forward price.
the development of a backwardation is associated with supply shortage
Often contrasted with contango
Example sentencesExamples
- This caused a significant disturbance in the market and exacerbated a backwardation in the price of tin.
- Contrary to those teachings, the normal condition of the futures markets is one of contango, not backwardation.
- In the case of agricultural commodities backwardation provides a most powerful incentive for traders to sell the cash commodity and buy the futures.
- Ministers have announced plans to cut production before prices start to weaken, helping to create the conditions for a sustained price backwardation, pricing physical oil at a premium to future supplies.
- 1.1 A situation in which the offer price for stock is lower than the bid.
Example sentencesExamples
- I am sure that your position is a hedge, but if your physical metal is delayed, you may have to borrow at this backwardation.
- One analyst said the falling price of nickel would come as a relief to U.S. buyers who recently had to deal with a steep backwardation that squeezed short positions.
- The backwardation widened to $28.50 per tonne in aftermarket trading late Wednesday.
- There has been no damage to the oil fields, but the oil market remains very tight as evidenced by the recent move into backwardation.
- Gold remains in backwardation right out to the six month term but at low rates.
- 1.2historical A percentage paid by a person selling stock for the right of delaying its delivery.