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backwardation

Line breaks: back¦ward|ation
Pronunciation: /bakwəˈdeɪʃ(ə)n
 
/

Definition of backwardation in English:

noun

[mass noun] Stock Exchange , British
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.
More example sentences
  • 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.
  • This caused a significant disturbance in the market and exacerbated a backwardation in the price of tin.
1.1A situation in which the offer price for stock is lower than the bid.
Example sentences
  • Gold remains in backwardation right out to the six month term but at low rates.
  • I am sure that your position is a hedge, but if your physical metal is delayed, you may have to borrow at this backwardation.
  • The backwardation widened to $28.50 per tonne in aftermarket trading late Wednesday.
1.2 historical A percentage paid by a person selling stock for the right of delaying its delivery.

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