Is Storage at a Loss Merely an Illusion of Spatial Aggregation?
AbstractThe storage-at-a-loss paradoxâ€”stocks despite inadequate price growth to cover storage costsâ€”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.
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Bibliographic InfoArticle provided by Agricultural Economics Association of Georgia in its journal Journal of Agribusiness.
Volume (Year): 27 (2009)
Issue (Month): ()
aggregation; convenience yield; corn; intertemporal arbitrage; regional and elevator data; soybeans; storage at a loss; Agribusiness; Marketing;
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