Why does the convenience yield decrease the future price?

[LePetitCaporal]

Hi guys, I was doing a mock exercise from the CFA website. I dont understand this problem and answer:

1. Do convenience yields affect futures prices? The futures price formula is f₀(T) = S₀ (1+r)^T + FV(CB,0,T), where FV(CB,0,T) represents the future value (FV) of the costs of storage minus the convenience yield. Thus the convenience yield decreases the futures price.

Why is it a decrease? In the formula we add it so shouldnt it increase the future price? Thx a lot

[breadmaker]

The second term in the expression has netted the storage and convenience yield terms. It might have been clearer had the authors used something like “S0(1+r)T+FV(storage,0,T) - FV(convenience yield,0,T)”

[LePetitCaporal]

@breadmaker

The second term in the expression has netted the storage and convenience yield terms. It might have been clearer had the authors used something like “S0(1+r)T+FV(storage,0,T) - FV(convenience yield,0,T)”

GReat thx a lot