What is backwardation?

Occurs when the spot price is higher than the future price

Backwardation occurs when the spot price is higher than the future price, or in other words, investors are willing to pay a premium to hold the commodity now.

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This causes a downward sloping futures price curve.

WHAT IS CONTANGO?

For example, a famine could have caused corn to be in short supply for the current season, but extended forecasts are calling for above-average rainfall to cause a surplus during the upcoming growing season.

That would make corn more expensive in the near term and cheaper further out along the price curve.