Contago and backwardation. These are new terms to me, but it seems "contago"0 means the future contracts are above the spot. This is pretty normal, most times, because of the cost of holding stock for later delivery.
"Backwardation" is when the spot is above the future price. Can indicate some sort of shortage. Backwardation is fairly rare, I read. But it often indicates, according to futures traders that the price is due for a run up. Oil did this late last year then doubled in the next half year. Gold did it a few months ago too and turned around and went into a strong uptrend channel.
Well, tin has just done a bit of it. Backwardation, that is. Last week or so. Tonight, the two prices are about the same spot and 3 month on the LME, which is half way there.
If this is a reasonable indicator, we might be in for a bit of arise in the tin price, or a change in trend to up.
Interesting to see....
tin price clue
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