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The Interaction of Working and Speculative Commodity Stocks

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  • Carter, Colin A.
  • Revoredo-Giha, Cesar

Abstract

This paper models the interaction of working (also called pipeline) and speculative commodity stocks. We model working inventories (i.e., raw material inventories carried by processors) based on Ramey’s (1989) model of inventories as factors of production, which allows us to represent storage under inter-temporal price backwardation, observed in commodity markets. We incorporate both speculative and working stocks in a simple model to analyze the interaction and to simulate the relationship between inter-temporal commodity price spreads and stocks. Our model replicates common price patters found in commodity markets.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2000 Annual meeting, July 30-August 2, Tampa, FL with number 21820.

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Date of creation: 2000
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Handle: RePEc:ags:aaea00:21820

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Keywords: Marketing;

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  1. Angus Deaton & Guy Laroque, 1990. "On The Behavior of Commodity Prices," NBER Working Papers 3439, National Bureau of Economic Research, Inc.
  2. Gray, Roger W. & Peck, Anne E., 1981. "The Chicago Wheat Futures Market: Recent Problems in Historical Perspective," Food Research Institute Studies, Stanford University, Food Research Institute, issue 01.
  3. repec:fth:inseep:8909 is not listed on IDEAS
  4. Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
  5. Brennan, Donna & Williams, Jeffrey & Wright, Brian D, 1997. "Convenience Yield without the Convenience: A Spatial-Temporal Interpretation of Storage under Backwardation," Economic Journal, Royal Economic Society, vol. 107(443), pages 1009-22, July.
  6. Chambers, Marcus J & Bailey, Roy E, 1996. "A Theory of Commodity Price Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 924-57, October.
  7. Miranda, Mario J & Glauber, Joseph W, 1993. "Estimation of Dynamic Nonlinear Rational Expectations Models of Primary Commodity Markets with Private and Government Stockholding," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 463-70, August.
  8. Lowry, M. Newton, 1988. "Working stocks and speculative stocks," Economics Letters, Elsevier, vol. 28(4), pages 311-314.
  9. Bruce L. Gardner & Ram�n L�pez, 1996. "The Inefficiency of Interest-Rate Subsidies in Commodity Price Stabilization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 508-516.
  10. repec:fth:harver:1487 is not listed on IDEAS
  11. Dale W. Jorgenson, 1991. "Productivity and Economic Growth," NBER Chapters, in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 19-118 National Bureau of Economic Research, Inc.
  12. Gustafson, Robert L., 1958. "Carryover levels for grains: A method for determining amounts that are optimal under specified conditions," Technical Bulletins 157231, United States Department of Agriculture, Economic Research Service.
  13. Ramey, Valerie A, 1989. "Inventories as Factors of Production and Economic Fluctuations," American Economic Review, American Economic Association, vol. 79(3), pages 338-54, June.
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