Price Determination And Storage In Commodity Markets: Soybeans And Wool
This chapter presents a model of price determination and allocation of available supplies between consumption and storage, based on the theoretical model of Peston and Yamey. Estimates of this model are presented for two commodities: US soybeans and Australian wool. Storage itself may be hedged or unhedged. The demand for and supply of hedged storage of soybeans is assumed to be measured by the end-of-month open interest of 'large' hedgers at the Chicago Board of Trade as published by the US Commodity Futures Trading Commission in Commitments of Traders and Databook for the years 1972 to 1978. The supply of hedged storage has therefore been measured by an estimate of sales of futures by short hedgers each month, rather than by open interest as in the case of US soybeans. Similarly the demand for hedged storage has been measured by an estimate of monthly purchases of futures by long hedgers.