backwardation

American  

[bak-wer-dey-shuhn] / ˌbæk wərˈdeɪ ʃən /

noun

1. (on the London stock exchange) the fee paid by a seller of securities to the buyer for the privilege of deferring delivery of purchased securities.

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backwardation British  

/ ˌbækwəˈdeɪʃən /

noun

1. the difference between the spot price for a commodity, including rent and interest, and the forward price

2. (formerly, on the Stock Exchange) postponement of delivery by a seller of securities until the next settlement period

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Etymology

Origin of backwardation

First recorded in 1840–50; backward + -ation

Compare meaning

How does backwardation compare to similar and commonly confused words? Explore the most common comparisons:

• contango vs. backwardation

Example Sentences

“So the index design has to incorporate inflation sensitivity of commodities, the shape of the commodities curve, and investing in commodities in backwardation versus contango,” he said.

From MarketWatch

Backwardation is when futures prices for near-term delivery of a commodity are higher than prices for delivery further down the line.

From MarketWatch

“The commodity landscape is littered with backwardation vs. contango trades gone bad. Now the Department of Energy is out there rolling the dice.”

From The Wall Street Journal

Yet “backwardation” in oil futures prices — a situation where current prices are higher than prices for contracts for future delivery — suggest “acute short-term supply stress, but not long-term shortage expectations,” Frank Walbaum, market analyst at fintech company Naga.com, which offers online trading.

From MarketWatch

On Monday morning, the opposite held—extreme backwardation.

From The Wall Street Journal