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Existing literature on commodity futures price volatility emphasizes time to expiration and the resolution of uncertainty. This paper stresses the supply and demand infexibilities arising from decision making. A decision made on the supply (demand) side makes future supply (demand) responses less elastic. Therefore, a shock arising after a decision is made is more effective in changing the futures price than a shock before the decision is made. The results support the maturity hypothesis but do not conflct with the state variable hypothesis of futures price volatility.


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