Definition of backwardation in English:



Stock Market
  • 1[mass noun] A 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
    • ‘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.’
    • ‘In the case of agricultural commodities backwardation provides a most powerful incentive for traders to sell the cash commodity and buy the futures.’
    • ‘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.’
    1. 1.1A situation in which the offer price for stock is lower than the bid.
      • ‘The backwardation widened to $28.50 per tonne in aftermarket trading late Wednesday.’
      • ‘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.’
      • ‘There has been no damage to the oil fields, but the oil market remains very tight as evidenced by the recent move into 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.’
    2. 1.2historical A percentage paid by a person selling stock for the right of delaying its delivery.