oboloo Glossary

Backwardation

oboloo Glossary

Backwardation

Backwardation Definition

In finance, backwardation is the condition where the price of a commodity for future delivery is lower than the spot price. This normally happens when there is an imminent shortage of the commodity, and producers are hesitant to sell forward because they expect prices to rise in the future. Backwardation can also be caused by high storage costs or other factors.

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