Unlocking the Secrets of Commodity Futures Prices: Changing the Game
The article explores how commodity futures prices are influenced by factors like interest rates, warehousing costs, and convenience yields. It shows that the basis (difference between futures and spot prices) can change due to interest rates and seasonal convenience yields. Additionally, the study reveals that some commodities have predictive power in forecasting future prices, and expected premiums can vary over time for certain commodities.