As demand for storage capacity for the world's most commonly traded commodities grows, governments and major private commodity trading companies are investing heavily in warehousing and tank capacity.

Storage space is a real issue for any physical commodity that is not consumed or processed immediately such as grains, sugar, metals, coal, oil and petrochemicals, and natural gas. For such commodities, stockpiling in storage facilities permits greater flexibility of supply when production is disrupted, where there is an increase in consumption or simply to give the party storing the goods an opportunity to take a strategic position when the market price moves in the future.

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Client Alert 2011-032