Inter-year spread risk is much larger and unpredictable. Its volatility increases sharply when supplies are small. The same kind of risk exists with maximum price contracts used for feed purchases. The size of this risk varies with market volatility, distance between options strike price and the underlying futures price, and the length of time until contract delivery. It tends to be largest with volatile markets and when the delivery date is several months away.
Provision is made to carry capital losses forward to later years.
For corporations, no capital loss is deductible unless matched by capital gains. Elevator contracts typically do not separate these price components, but tax issues can still be critical. This risk is especially important for credit-sale contracts, in which the title to the grain has been transferred to the buyer but payment has not yet been made. In Texas and many other states, credit-sale contracts do not have the same financial safeguards available for storage under warehouse receipts. This risk also may be a consideration with other types of contracts.