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The Growing Financialisation of Commodity Markets: Divergences between Index Investors and Money Managers

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  • Jörg Mayer

Abstract

Commodities are key for developing countries' economic integration. This article distinguishes two types of financial investors in commodities and emphasises differences in position taking motivation and price impacts. Index trader positions are positively correlated with roll returns, while money managers emphasise spot returns. During 2006--2009, index trader positions had a price impact for some agricultural commodities, as well as oil. During 2007--2008, money managers impacted prices for non-agricultural commodities, especially copper and oil. The financialisation of commodity markets may make it more difficult for developing countries to manage their resource sectors for sustained economic development.

Suggested Citation

  • Jörg Mayer, 2012. "The Growing Financialisation of Commodity Markets: Divergences between Index Investors and Money Managers," Journal of Development Studies, Taylor & Francis Journals, vol. 48(6), pages 751-767, June.
  • Handle: RePEc:taf:jdevst:v:48:y:2012:i:6:p:751-767 DOI: 10.1080/00220388.2011.649261
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    References listed on IDEAS

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    Cited by:

    1. Kritika Mathur & Nidhi Kaicker & Raghav Gaiha & Katsushi S. Imai & Ganesh Thapa, 2014. "Financialisation of food commodity markets, price surge and volatility: new evidence," Chapters,in: Handbook on Food, chapter 7, pages 149-176 Edward Elgar Publishing.
    2. Troester, Bernhard & Staritz, Cornelia, 2013. "Fundamentals or financialisation of commodity markets: What determines recent wheat prices?," Working Papers 43, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    3. repec:eee:jrpoli:v:53:y:2017:i:c:p:300-316 is not listed on IDEAS
    4. Gonzalo Cortazar & Ivo Kovacevic & Eduardo S. Schwartz, 2013. "Commodity and Asset Pricing Models: An Integration," NBER Working Papers 19167, National Bureau of Economic Research, Inc.
    5. Michael Hachula & Malte Rieth, 2015. "Finanzspekulation und Rohstoffpreise," DIW Roundup: Politik im Fokus 63, DIW Berlin, German Institute for Economic Research.
    6. repec:bla:jageco:v:68:y:2017:i:2:p:345-365 is not listed on IDEAS
    7. Sophie van Huellen, 2013. "Price Non-Convergence in Commodities: A Case Study of the Wheat Conundrum," Working Papers 185, Department of Economics, SOAS, University of London, UK.
    8. Berdegué, Julio A. & Escobal, Javier & Bebbington, Anthony, 2015. "Explaining Spatial Diversity in Latin American Rural Development: Structures, Institutions, and Coalitions," World Development, Elsevier, vol. 73(C), pages 129-137.
    9. Ederer, Stefan & Heumesser, Christine & Staritz, Cornelia, 2013. "The role of fundamentals and financialisation in recent commodity price developments: An empirical analysis for wheat, coffee, cotton, and oil," Working Papers 42, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    10. Haase, Marco & Seiler Zimmermann, Yvonne & Zimmermann, Heinz, 2016. "The impact of speculation on commodity futures markets – A review of the findings of 100 empirical studies," Journal of Commodity Markets, Elsevier, vol. 3(1), pages 1-15.

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