A solution to a big commodity price puzzle (super wonkish)

A long standing puzzle in the economics of commodity prices concerns the large amount of autocorrelation observed in most price series. While most commodity prices appear to revert to historical means eventually, it typically takes a long time, so much so that, at least statistically, it's hard to reject the hypothesis that price shocks are permanent and historical reversions have simply been due to chance. This "puzzle" was so articulated in a series of very influential papers by Angus Deaton and Guy Laroque. They reasoned that commodity prices should be autocorrelated to some extent due to the buffering effects of storage. In plentiful times some production is saved; in bad years, inventories are drawn down to supplement production. Consumption is therefore smoother than production and prices are less volatile that they would be without storage, but are autocorrelated even though production shocks can appear random (like from the weather). The puzzle came about