Why might an investor be unlikely to purchase a physical commodity such as corn?

Investors often show hesitation in purchasing physical commodities like corn primarily due to logistical challenges associated with storage. When considering commodities, one essential factor is that they can be bulky and require significant space for proper storage. This involves not only securing a location but also ensuring that the conditions are suitable to prevent spoilage or degradation of the commodity. The costs associated with storage can diminish potential profits and complicate the process of holding the commodity before it is sold or used.

Furthermore, the requirement for appropriate storage goes beyond simple warehouse space. Managing the storage of physical commodities includes challenges such as insuring the product, maintaining the right environmental conditions, and monitoring for pests or spoilage, all of which can add an additional layer of complexity and expense for the investor, making the ordeal less appealing compared to alternative investment options.