In financial markets, the situation where futures prices are lower than spot prices, or when a market participant pays others to accept a contract.
From back + adation (possible from ad- + Latin datio, 'giving'). The term originated in commodity and futures trading to describe this pricing relationship.
Backadation signals that traders believe prices will fall or that immediate supply is scarce—watching for backadation helps traders predict market turning points and economic shifts.
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