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The Supply of Storage

In: The Economics of Futures Trading

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  • Michael J. Brennan

Abstract

It is a familiar proposition that the amount of a commodity held in storage is determined by the equality of the marginal cost of storage and the temporal price spread. Why then do we observe stocks being carried from one period to the next when the price expected to prevail in the next period — reflected in the futures price quotation for delivery in that period — is below the current price.

Suggested Citation

  • Michael J. Brennan, 1976. "The Supply of Storage," Palgrave Macmillan Books, in: The Economics of Futures Trading, chapter 4, pages 100-107, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-02693-7_5
    DOI: 10.1007/978-1-349-02693-7_5
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    Cited by:

    1. Santeramo, Fabio, 2022. "Price Dynamics, LOP and Quantile Regressions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    2. Raza, Syed Ali & Masood, Amna & Benkraiem, Ramzi & Urom, Christian, 2023. "Forecasting the volatility of precious metals prices with global economic policy uncertainty in pre and during the COVID-19 period: Novel evidence from the GARCH-MIDAS approach," Energy Economics, Elsevier, vol. 120(C).
    3. Qi Xu & Yang Ye, 2023. "Commodity network and predictable returns," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 43(10), pages 1423-1449, October.
    4. Duc Huynh, Toan Luu & Burggraf, Tobias & Wang, Mei, 2020. "Gold, platinum, and expected Bitcoin returns," Journal of Multinational Financial Management, Elsevier, vol. 56(C).
    5. Aslam, Faheem & Zil-e-huma, & Bibi, Rashida & Ferreira, Paulo, 2022. "Cross-correlations between economic policy uncertainty and precious and industrial metals: A multifractal cross-correlation analysis," Resources Policy, Elsevier, vol. 75(C).
    6. Santeramo, Fabio, 2021. "Price dynamics, LOP and quantile regressions," MPRA Paper 107454, University Library of Munich, Germany.

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