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| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
Backwardation means the price of a commodity for delivery at a future date is significantly lower than the current or "spot" price. This is an unusual condition, as a rational buyer will usually refuse to pay a higher price today if he is guaranteed a lower price tomorrow.
When it occurs, backwardation is usually the result of shortages.
The opposite of backwardation is Contango



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