A market situation in which prices in succeeding delivery periods are progressively lower than in the nearest delivery period. Also known as an "inverted market." The opposite of backwardation is contango.
Market condition where the spot, or current price for a metal is higher than the three-month delivery price. This usually indicates immediate demand is perceived to be stronger than long-term demand. Not considered to be a "normal" market state (See Contango).
Market scenario when the spot price of a commodity is higher than the forward price. In the precious metal markets this is the result of the monetary interest rate being less than the precious metal lease rate.
The situation when the cash or spot price of a metal is greater than its forward price. A backwardation occurs when a tight nearby situation exists in a metal. The size of the backwardation is determined by differences between supply/demand factors in the nearby positions compared with the same factors on the forward position. There is no inherent limit to the backwardation. The backwardation is also referred to as the 'back'.
A market situation where the spot price trades at a premium to the forward price. Opposite of contango. Unlike the base metals, the price of gold rarely lapses into backwardation although this did occur briefly on November, 28, 1995 in the near month only.
Is the market condition whereby the deferred or more forward delivery months are at a progressive discount to the spot or nearby month. This is also known as an inverted market. This is opposite to a contango or carrying charge market.
when the price of nearer (typically prompt or spot) crude or another underlying commodity or instrument trades at a premium to the same commodity or instrument traded further forward. Also known as an inverse. see also contango
market condition in which futures prices are lower in the distant delivery months than in the nearest delivery month. This situation may occur when the costs of storing the product until eventual delivery are effectively subtracted from the price today. The opposite of contango.
The condition where prompt prices for a commodity are higher than the price for future delivery. This signals that the market is currently experiencing tight conditions and scrambling for prompt supplies. In other words, prices are high now but people believe prices will go down so they carry a low inventory. Contango is the situation with opposite circumstances from backwardation.
Contract pricing structure in which deliveries in the near future have a higher price than those made later on. This occurs when expectations of demand, for the near future, exceed supply at current price level.
In futures market, when a commodity is in shortage, causing near month contract to sell at a premium and distant month contract to sell at a discount i.e. spot price of the commodity is higher than the forward price.
Market situation in which futures prices are progressively lower in the distant delivery months. For instance, if the gold quotation for February is $160.00 per ounce and that for June is $155.00 per ounce, the backwardation for four months against January is $5.00 per ounce. (Backwardation is the opposite of contango). See Inverted Market.
1. When the bid price exceeds the offer price for a stock, the stock is in backwardation. For example, where the prices are 512 - 510. This means that the best price at which market makers will sell the stock is less than the best price at which they will buy the stock. This is unusual, since market makers will normally charge a spread, buying stocks for less than the price at which they will sell them. The reason is usually some market distortion, such as a share repurchase scheme by the company. When the price is backward, the touch strip on the SEAQ turns red. See also Choice Price and SEAQ 2. In futures markets, when the future price is less than the cash price. See also Discount and Contango.
A relationship between prices in which the cost of prompt, immediately available supplies exceeds the price of volumes available in the future. Oil markets have been in backwardation for much of 1995 and 1996.
Backwardation, sometimes incorrectly referred to as "backwardization," is the situation where futures contracts closer to expiration trade at higher prices than those that are far from expiration. This is the case of a convenience yield that is greater than the risk free rate. Backwardation is an abnormal situation, and is suggestive of supply insufficiencies in the corresponding (physical) spot market.
Term used to describe an energy market in which the anticipated value of the spot price in the future is lower than the current spot price. When a market is in backwardation, market participants expect the spot price to go down. The reverse situation is described as contango.