contango

[Benjamin Zimmer]

On 1/12/07, James A. Landau <JJJRLandau at netscape.com> wrote:
>
>
>  I thought I knew financial jargon, but the article below has some terms I never heard of.
>
[snip]
>
> Falling stocks should eventually push prompt prices above longer-dated contracts --
> a market condition known as backwardation -- allowing index funds to profit by selling
> prompt contracts each month and buying later ones.
>
> "Backwardation makes everybody happy," said Keith Sano, manager with the
> commodities business at Sumitomo Corp.
>
> In contango, the opposite of backwardation, those same investors suffer losses with
> every roll, a bitter pill to swallow for pension or investment funds who have poured
> some $100 billion into commodity indices.

I wasn't familiar with these either, but they're quite old in UK
usage. OED has "backwardation" from 1850 and "contango" from 1853. The
etymology given for "contango" is rather unsatisfying: "App. an
arbitrary or fortuitous formation from _continue_."  I wonder if there
was any influence from "fandango".


--Ben Zimmer

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