Backwardation
Backwardation is a futures-market condition where near-term futures prices are higher than longer-dated futures prices, resulting in a downward-sloping futures curve toward maturity. It contrasts with contango, where prices rise with longer maturities.
Example: Example: In a commodity market showing backwardation, near-term futures contracts trade at higher prices (e.g., near-month at $105) than longer-dated contracts (e.g., 6-month at $100).
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