Backwardation
Also known as: backwardation
Backwardation is a market condition where the price of a commodity's forward or futures contract price is trading below the spot price.
Connections3
The market state opposite to contango
Backwardation occurs when the futures price is lower than the spot price, serving as the direct conceptual counterpart to contango.
market condition where forward price is below spot price
Backwardation is the inverse of contango, representing a downward-sloping forward curve often caused by supply shortages.
market condition where spot price exceeds future price
This state occurs when the current demand for an asset is significantly higher than the expected future supply, causing the futures price to trade at a discount.