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1. In a commodity market, the amount by which the spot price (including the cost of stocking ·over time) exceeds the forward price.

2. On the stock exchange, a sum of money paid by a bear to a bull for the right to delay delivery of securities sold forward at a fixed price. A bear will have sold securities to a bull for delivery on a certain date in the expectation that, by that date, the market price will have fallen. If they do not, in fact, he may consider it worthwhile to pay a backwardation so as to defer delivery of the shares until the next account period.

Reference: The Penguin Business Dictionary, 3rd edt.