The Working Curve and Commodity Storage under Backwardation

Posted: 1 Oct 2007

See all articles by Colin A. Carter

Colin A. Carter

University of California, Davis - Department of Agricultural and Resource Economics

Cesar L. Revoredo Giha

Scottish Agricultural College - Department of Agricultural and Food Economics

Abstract

There remains controversy over whether the empirical curve relating intertemporal commodity price spreads and stocks, originally drawn by Holbrook Working in 1933 (i.e., the Working curve), is a valid stylized fact in commodity markets. The core of the controversy is the portion of the curve representing commodity stocks under backwardation. In this article we analyze the original data used by Working, plus more disaggregated numbers. We find that the Working curve is indeed valid. The diversity of stockholders and different stockholding motives most likely explain the empirical Working curve relationship.

Suggested Citation

Carter, Colin A. and Giha, Cesar L. Revoredo, The Working Curve and Commodity Storage under Backwardation. American Journal of Agricultural Economics, Vol. 89, No. 4, pp. 864-872, November 2007. Available at SSRN: https://ssrn.com/abstract=1018120 or http://dx.doi.org/10.1111/j.1467-8276.2007.01021.x

Colin A. Carter (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Cesar L. Revoredo Giha

Scottish Agricultural College - Department of Agricultural and Food Economics ( email )

Auchincruive, AYR KA6 5H
United Kingdom

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