What Causes Commodity Price Backwardation?

Darren L. Frechette and Paul Fackler ()

American Journal of Agricultural Economics, 1999, vol. 81, issue 4, 761-771

Abstract: A recently proposed explanation for futures price backwardation is examined. An equilibrium model with spatial heterogeneity leads to the interpretation of backwardations as mismeasurement by the analyst. However, the model predicts that backwardations are more affected by the location of stocks than by their aggregate level. Empirical examination of the United States corn market fails to support this result. Copyright 1999, Oxford University Press.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:81:y:1999:i:4:p:761-771

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