Commodities Backwardation Jumps on Russia-Ukraine Escalation
- Bloomberg Commodity Index futures 6% above one-year forward
- Geopolitical tension adds to concerns about tight supplies
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Commodities are being priced near their highest premium on record to deliveries one year ahead, a measure known as backwardation that reflects how physical supplies of everything from oil to corn remain tight amid booming demand and rising geopolitical tensions.
The 23 energy, raw-material and crop futures that make up the Bloomberg Commodity Index were about 6% higher than their one-year forward contracts at the close on Wednesday, according to Bloomberg calculations. That’s higher than any month-end backwardation rate in at least 15 years.