Unlocking the Cost of Carry Model: Revolutionizing Commodity Futures Price Forecasting
Futures prices may not always predict cash prices accurately for commodities like lead. The cost of carry model, which considers factors like inventory and interest rates, plays a crucial role in forecasting cash prices. By analyzing data from the London Metal Exchange over several decades, it was confirmed that the cost of carry model elements, along with futures prices, are important in predicting cash prices for lead.