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<p>[QUOTE=&quot;justafarmer, post: 1449595, member: 3926&quot;]For simplicity sake - laese rates are basically a factor of interest. If you own a commodity stored in a CME, LME, etc approved warehouse it is not held there free of charge. It has got to charge fees else the warehouse wouldn&#039;t exist. It has to make a profit. There are other carrying cost associated when holding a commodity. When an entity leases a commodity they take on the responsibilty for paying many of these costs. The lessor instead of loaning money are loaning a commodity and they are due a return equal to the amount of the market interest rate. At this point in time interest rates are so low that the warehouse/carrying charges amount to more money than what interest on such a loan would generate - therefore the lessor pays the leasee the difference producing a negative lease rate. A commodity lease is actually a loan but instead of loaning money you are loaning a commodity and as such the interest/rent is paid in like kind making it constant in terms of that commodity and not affected by the money valuation of the commodity in the market during the term of the lease.</p><p><br /></p><p>The idea that a lessor is not earning a return when loaning a commodity at a negative lease rate simply is not true.[/QUOTE]</p><p><br /></p>

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