Normal backwardation theory

Holds that the futures price will be bid down to a level below the expected spot price.

Normal Backwardation Theory

In Keynesian economics, a theory stating that the future spot price for a commodity will be higher than the forward price. This is because the producers of commodities expect to sell no matter what, and are willing to sell at a loss, if necessary. In normal backwardation, no rational investor will buy on the future spot market if he/she can buy more cheaply on the forward market. The extent to which normal backwardation occurs in the market is debated.

单词	normal backwardation theory
释义	Normal backwardation theory Normal backwardation theory Holds that the futures price will be bid down to a level below the expected spot price. Normal Backwardation Theory In Keynesian economics, a theory stating that the future spot price for a commodity will be higher than the forward price. This is because the producers of commodities expect to sell no matter what, and are willing to sell at a loss, if necessary. In normal backwardation, no rational investor will buy on the future spot market if he/she can buy more cheaply on the forward market. The extent to which normal backwardation occurs in the market is debated.
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