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Do Interest Rates Explain Disaggregate Commodity Price Growth?

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  • Franken, Jason R.V.
  • Garcia, Philip
  • Irwin, Scott H.

Abstract

The storage at a loss paradox - inventories despite an inadequate spot-futures price spread 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 inventories, and mismeasurement/aggregation of data. Statistical analyses of regional- and elevator-level data suggest that aggregation can impact results, and that soybean price behavior is generally consistent with inter-temporal arbitrage conditions, while corn price behavior points to convenience yields at longer horizons.

Suggested Citation

  • Franken, Jason R.V. & Garcia, Philip & Irwin, Scott H., 2006. "Do Interest Rates Explain Disaggregate Commodity Price Growth?," 2006 Annual meeting, July 23-26, Long Beach, CA 21319, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21319
    DOI: 10.22004/ag.econ.21319
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    References listed on IDEAS

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