| Commodity markets are going back to basics. Instead of moving up (or down) in lockstep with each other, and with other assets, they are beginning to show variation. The “backwardation” seen in some commodities is an indication of this change. Referring to conditions where it costs more to buy a commodity in the spot market than for future delivery, this is not a term you hear much in the commodities world these days.
Backwardation usually signals a tight near-term supply and demand situation. When supplies are plentiful and commodity prices are falling, prices tend to be in the opposite condition, known as “contango”...............................................Full Article: Source
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