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Fourteen large commodity trading disasters: What happened and what can we learn?

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  • Westgaard, Sjur
  • Frydenberg, Stein
  • Mohanty, Sunil K.

Abstract

In the commodity markets, consumers, producers, and investors will occasionally lose out on positions in the futures and options markets. Very large losses in commodity trading can weaken the trust of brokers, exchanges, regulators, and other social institutions. In this paper, we review 14 large losses in commodity trading, measured in 2021 US dollars. We analyze what occurred and how such events could occur again. Several of the events have common features, which indicates that actors learned little from related events. We conclude by discussing what can be done to prevent such incidents from occurring in the future.

Suggested Citation

  • Westgaard, Sjur & Frydenberg, Stein & Mohanty, Sunil K., 2022. "Fourteen large commodity trading disasters: What happened and what can we learn?," Journal of Commodity Markets, Elsevier, vol. 27(C).
    • Handle: RePEc:eee:jocoma:v:27:y:2022:i:c:s2405851321000544
    DOI: 10.1016/j.jcomm.2021.100221
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    Cited by:

    1. Marek Vochozka & Svatopluk Janek & Zuzana Rowland, 2023. "Coffee as an Identifier of Inflation in Selected US Agglomerations," Forecasting, MDPI, vol. 5(1), pages 1-17, January.

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    More about this item

    Keywords

    Commodity risk; Speculation; Hedging; Commodity derivatives;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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