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Backwardation
n the futures market the price of a contract for future delivery of a commodity usually trades above the spot price because the owner of the contract is deemed to have the advantage of holding cash until the time of delivery and is assumed to be able to earn interest on that cash.
Occasionally, however, the spot price actually exceeds the futures price. This is known as backwardation, or an inverted market.
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Added: Sun May 14 2006
