The price of commodities depends on some factors such as storage costs, lease rates, brokerage Spreads, transportation and the region of exchange. However we shall discuss the unobvious in this article.Commodity forward and futures prices are the result of a present value. The present value of a commodity is not dependent on hedges and storage may be costly. Given the difficulty of pricing commodities our goal is to understand forward and spot prices. Electricity is an extreme of non-storable commodities. Brokers also lease these commodities for the sake of tradability and add up to the cost of pricing commodities. Borrowing and leasing also contributes to the pricing of financial forward contracts.Storage is always costly for commodities. Perhaps we should consider a situation where you yourself are a commodity merchant and ask yourself, whether you would be willing to store this unit until time. The logic with storage cost is simple indeed,you will be willing to store only if the present value of selling at the time you brought the commodity is atleast greater than that of selling at present or in the near future. When there is storage costs the forward price and thespot price is higher. If someone approached you to borrow a commodity from which you derived a convenience yield, you are simply asking for interest for leasing the commodity.