0 a situation in which the price of a commodity (= a product, such as oil or a metal, that is traded in large quantities) is lower if the buyer is to receive the commodity at a future date than it is if the buyer receives it immediately:
Silver has been in backwardation for the past five weeks.
Often it is not possible to make backwardation historic adjust ments?
The opposite market condition to contango is known as normal backwardation.
If spot prices of gold or silver are permanently above their futures price, the precious metals market is going into permanent backwardation.
However, many commodities markets are frequently in backwardation, especially when the seasonal aspect is taken into consideration, e.g., perishable and/or soft commodities.
Soft commodities have been known to adopt a backwardation trend until the late 1990s when futures were actively traded.
The equilibrium futures price can be either below or above the (rationally) expected future price (backwardation or contango)...
It is argued that backwardation is abnormal, and suggests supply insufficiencies in the corresponding (physical) spot market.
A market is in backwardation when the futures price is below the expected future spot price for a particular commodity.
