Mar 19, 2021
Commodity storage cost, forward prices, lease rate and the convenience yield
The price of commodities depends on some factors such as storage costs, lease rates, brokerage Spreads, transportation and the region of exchange. However we shall discuss the unobvious in this article.Commodity forward and futures prices are the result of a present value. The present value of a commodity is not dependent on hedges and storage may be costly. Given the difficulty of pricing…
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