Is Storage at a Loss Merely an Illusion of Spatial Aggregation?

Jason R.V. Franken, Philip Garcia and Scott Irwin

Journal of Agribusiness, 2009, vol. 27, issue 01-2, 20

Abstract: The storage-at-a-loss paradox—stocks despite inadequate price growth to cover storage costs—is an unresolved issue of long-standing interest to economists. Alternative explanations include risk premiums for futures market speculators, convenience yields from holding stocks, and mismeasurement/aggregation of data. Statistical analyses of regional and elevator corn and soybean price growth in Illinois suggest limited aggregation effects and reveal a pattern of regional- and elevator-level backwardations in the presence of Illinois corn stocks that is inconsistent with aggregation explanations for storage at a loss. Interviews with elevator managers support the existence of convenience yields.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jloagb:90658

DOI: 10.22004/ag.econ.90658

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