1. A market condition in which the price of a commodity or financial instrument for future delivery is lower than the spot price (current price for immediate delivery).
Usage: finance; commodities trading

Examples

• The oil market entered backwardation when immediate supply became scarce and traders bid up spot prices.
• In backwardation, investors who hold physical commodities can profit by selling them now rather than waiting for future delivery.
• The futures curve showed backwardation, indicating strong near-term demand for the commodity.
• During the shortage, gold experienced backwardation as buyers preferred immediate delivery over future contracts.
• Backwardation typically signals that the market values current supply more highly than expected future supply.