What does Backwardation mean?

Backwardation meaning in General Dictionary

The sellers postponement of delivery of stock or stocks with the consent of the purchaser upon payment of a premium towards latter in addition the advanced so paid See Contango

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  • the vendor's postponement of delivery of stock or stocks, using permission associated with purchaser, upon payment of reasonably limited into latter; -- in addition, the advanced so compensated. See Contango.

Backwardation meaning in Economics Dictionary

whenever a commodity is valued much more extremely in an area marketplace (that is, if it is for delivery these days) compared to a futures marketplace (for distribution sooner or later in the foreseeable future). Usually, interest expenses imply that futures prices are greater than area prices, unless the areas expect the buying price of the product to-fall eventually, maybe because there is a short-term bottleneck in supply. When place costs are lower than futures costs its known as contango.

Backwardation meaning in Finance Dictionary

within the futures market, an ailment in which an amount is gloomier in distant distribution months compared to the near distribution months. Normally, the cost of a contract for future delivery of a commodity trades over the spot cost considering that the owner of contract is regarded as to truly have the advantage of holding money before the time of delivery and it is thought to be able to earn interest on that money. As soon as the spot price surpasses the futures cost, it really is referred to as backwardation, or an inverted marketplace.

Backwardation meaning in Law Dictionary

In the language of stock market, this term indicates a consideration paid for wait in distribution of stock contracted for, whenever pricing is reduced for time than for cash. Dos Passos, Stock-Brok. 270.

Backwardation meaning in Business Dictionary

Inverted market scenario in products and forex trading, where prices for deliveries in the future (spot rates) are more than those for later deliveries. Does occur typically considering shortages brought on by excess of demand over-supply. Opposite of contango.