MARKET INVERSION IN COMMODITY FUTURES PRICES

In an inverted market, current prices are higher than future prices and thus the price of storage is negative. Market inversions as measured with futures spreads rarely occur during early months of the crop year. However, market inversions frequently occur across crop years and near the end of the crop year. In the last half of the crop year, market inversions clearly reflect a signal to sell stocks. Too few inversions occur early in the crop year to reach a definitive conclusion for that period. Behavioral finance offers possible explanations of why producers would hold stocks in an inverted market.


Subject(s):
Issue Date:
2002-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/15077
Published in:
Journal of Agricultural and Applied Economics, Volume 34, Number 3
Page range:
459-476
Total Pages:
18
JEL Codes:
Q13




 Record created 2017-04-01, last modified 2018-01-22

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