Explain the Term "Backwardation" in Futures Markets ▴ Learn

Explain the Term “Backwardation” in Futures Markets.

Backwardation is a market condition where the current spot price of an asset is higher than the price of its futures contract for a future delivery date. This is the opposite of Contango.

Backwardation is often seen in commodity markets when there is a high current demand or a perceived shortage of the asset, and holding costs are low or negative.

What Is ‘Contango’ and ‘Backwardation’ in the Context of Futures and Perpetual Contracts?

Define the Terms ‘Contango’ and ‘Backwardation’ in the Futures Market

What Is the Concept of ‘Contango’ and ‘Backwardation’ in Futures Markets?

How Does the Concept of “Contango” or “Backwardation” Apply to Perpetual Futures?