Crude, Copper, and Soybeans Face Falling Futures Curves

By Commodity HQ  JAN 13, 2014 12:05 PM

These commodities are in backwardation, meaning near-month futures are more expensive than those expiring further into the future.

 


Last week, we gave investors our first contango report for 2014, noting that precious metals are facing upward curves for the foreseeable future. This week, we’re bringing you the first backwardation report of the year. For those unfamiliar with this term, backwardation is the process whereby near-month futures are more expensive than those expiring further into the future, creating a downward-sloping curve for future prices over time – put simply, it’s the opposite of contango.

Backwardation can often occur due to market expectations of which way a commodity’s price will move. On many occasions, a commodity will fall into backwardation if it has had a large and rapid run-up, especially grains and softs that are at the mercy of inclement weather. Below, we outline four major commodities that are facing falling futures curves as we settle into 2014.
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Editor's note: This article by Jared Cummans was originally published on Commodity HQ
No positions in stocks mentioned.