Opportunity Cost in Physical Commodities Investment

During a recent seminar on alternative investments, a discussion arose regarding the characteristics of physical commodities. Barbara, a CFA charterholder, emphasized the importance of understanding the unique risks and costs associated with investing in physical commodities as opposed to financial derivatives. She highlighted three key factors: storage costs, potential for physical degradation, and market liquidity. In light of this discussion, consider the following scenarios related to physical commodities and identify which one exemplifies the concept of opportunity cost in commodity investment.