Is Storage at a Loss Merely an Illusion of Aggregation?

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

No 19005, 2006 Conference, April 17-18, 2006, St. Louis, Missouri from NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management

Abstract: The storage at a loss paradox of positive inventories despite inadequate spot-futures price spread coverage of storage costs is an unresolved issue of long-standing interest to economists. Alternative explanations include risk premiums for futures market speculators, convenience yields from having inventories on hand, and the mismeasurement/aggregation of data. T-test analyses of disaggregated data suggest soybean price behavior consistent with intertemporal arbitrage conditions and corn price behavior that may imply convenience yields.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 22
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ncrsix:19005

DOI: 10.22004/ag.econ.19005

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