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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.