The Theory Of Storage :: essays research papers

The Theory of StorageTHE THEORY OF STORAGE. THE SUPPLY OF STORAGE REFERS non TO THE SUPPLY OfSTORAGE SPACE BUT TO THE SUPPLY OF COMMODITIES AS INVENTORIES. IN GENERAL ASUPPLIER OF STORAGE IS ANYONE WHO HOLDS TITLE TO STOCKS WITH A assimilate TO THEIRFUTURE SALE, EITHER IN THEIR PRESENT OR IN A MODIFIED FORM. SINCE PRODUCTION ISNOT STABLE FOR ALL COMMODITIES ESPECIALLY ARGICULTURAL CONSUMERS collect THAT THESTORAGE FUNCTION BE SO PERFORMED THAT THE FLOW OF COMMODITIES FOR SALE result BEMADE copulationLY STABLE." (BRENNAN P. 51)"the theory purports to provide an explanation of the guardianship of all stocks,including those for which there is not an active future market. it provide beshown that, on the supply side, in addition to the marginal expenditure onphysical storage and the marginal convenience yield another variable, a riskpremium, is required to explain the holding of stocks as functions of pricespreads. in the empirical part of the study the theory will be ut ilize tostocks of several agricultural commodities. the risk premium for each commoditywill be measured residually under specified conditions by deducting form theprice spread between two periods the other two components of the marginal greetof storage." (brennan p.50)IN GENERAL WE CAN OBTAIN A MEASURE OF THE RELATIVE RISK PREMIUMS INVOLVED IN THESTORAGE OF DIFFERENT COMMODITITES."allen capital of Minnesota, in a 1970 American journal of agricultural economics article,studied the pricing of texture storage space in the u.s. during the surplus periodof the 1950s and 1960s. Pauls calculate differs from other works in that heinvestigates the pricing of all cereal storage not just that available to aparticular commodity. eon brennans marginal storage cost is from the point ofview of the owner of the grain, Paul is looking at the first component only.