2023
DOI: 10.1111/ajae.12436
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Commodity storage and the cost of capital: Evidence from Illinois grain farms

Joseph P. Janzen,
Nicholas D. Paulson,
Juo‐Han Tsay

Abstract: Commodity inventories are the key state variable determining the magnitude of commodity price responses to supply and demand shocks. Many firms in commodity supply chains use storage, but we know little about which firms and why. The economic theory of storage asserts that firms in a competitive market for inventories will store based on current and expected market prices and the per‐unit cost of storing. We empirically test at the firm‐level the importance of one major cost of storage: the opportunity cost of… Show more

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