What Causes Commodity Price Backwardation?

A recently proposed explanation for futures price backwardation is examined. An equilibrium model with spatial heterogeneity leads to the interpretation of backwardations as mismeasurement by the analyst. However, the model predicts that backwardations are more affected by the location of stocks than by their aggregate level. Empirical examination of the United States corn market fails to support this result. Copyright 1999, Oxford University Press.

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Year of publication:	1999
Authors:	Frechette, Darren L. ; Fackler, Paul L.
Published in:	American Journal of Agricultural Economics. - Agricultural and Applied Economics Association - AAEA. - Vol. 81.1999, 4, p. 761-771
Publisher:	Agricultural and Applied Economics Association - AAEA

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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