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

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.


Issue Date:
2009
Publication Type:
Journal Article
DOI and Other Identifiers:
0738-8950 (Other)
PURL Identifier:
http://purl.umn.edu/90658
Published in:
Journal of Agribusiness, Volume 27, Number 1-2
Page range:
65-84
Total Pages:
20




 Record created 2017-04-01, last modified 2017-08-25

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