Modelling Dynamic Storage Function in Commodity Markets:Theory and Evidence

Stockholding decisions in agricultural commodity markets represent a source for strengthening risk management techniques related to future markets development. In this work, we propose a generalised dynamic approach to obtain a consistent stockholding decision rule, in which the cash and storage markets are modelled simultaneously. The qualitative dynamic investigation of the storage function is carried out by considering two heterogeneous categories of agents - processors and speculators – who are responsible of fluctuations of the spot price equation. Using the U.S. corn market data, empirical estimations are statistically robust and economically coherent with the theory