Commodity Price Volatility: The Impact of Commodity Index Traders
AbstractOver the years, critics have argued that futures market prices have been either too low or too high. Speculators have often been the target for the wrath of those feeling the futures price does not properly reflect market fundamentals. Recently, the criticism has been vented toward a new type of speculator that has been blamed for the dramatic changes in agricultural commodity prices experienced over the last several years. Commodity index traders (CITs) and other large institutional traders are commonly accused of exerting a destabilizing influence on commodity prices. The intensity of the debate over the role of CITs appeared to wane with the reduction in commodity prices since 2008 but the recent release of a well-publicized OECD report on the issue by Irwin and Sanders (2010) along with the doubling of wheat prices and the claim by von Braun (2010) and others that the rise was due to speculative activity has renewed the debate.
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Bibliographic InfoPaper provided by Canadian Agricultural Trade Policy Research Network in its series Commissioned Papers with number 95803.
Date of creation: Oct 2010
Date of revision:
commodity; index futures; trading; volatility; Agribusiness; Agricultural and Food Policy; Demand and Price Analysis; Marketing;
Other versions of this item:
- Hailu, Getu & Weersink, Alfons, 2011. "Commodity Price Volatility: The Impact of Commodity Index Traders," Trade Policy Briefs 102305, Canadian Agricultural Trade Policy Research Network.
- NEP-AGR-2010-11-20 (Agricultural Economics)
- NEP-ALL-2010-11-20 (All new papers)
- NEP-MIC-2010-11-20 (Microeconomics)
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