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Commodity prices, financial markets, and development: Effects of the financialisation of commodity markets and necessary policy reforms

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  • Staritz, Cornelia
  • Heumesser, Christine
  • Küblböck, Karin

Abstract

Given the far-reaching implications of commodity prices for developing countries an understanding of the factors behind recent commodity price developments is crucial. ÖFSE research shows that besides structural changes in fundamental supply and demand conditions, the increasing presence of financial investors on commodity derivative markets has impacted on price dynamics and the microstructure of these markets. This questions to what extent these markets still fulfill their fundamental roles, i.e. price discovery and price risk management, in particular for smaller commercial traders. Policy reforms are required to reduce excessive speculation and ensure the fundamental roles of commodity derivative markets.

Suggested Citation

  • Staritz, Cornelia & Heumesser, Christine & Küblböck, Karin, 2013. "Commodity prices, financial markets, and development: Effects of the financialisation of commodity markets and necessary policy reforms," Policy Notes 09/2013, Austrian Foundation for Development Research (ÖFSE).
    • Handle: RePEc:zbw:oefsep:092013
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    References listed on IDEAS

    as
    1. 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, Austrian Foundation for Development Research (ÖFSE).
    2. Heumesser, Christine & Staritz, Cornelia, 2013. "Financialisation and the microstructure of commodity markets: A qualitative investigation of trading strategies of financial investors and commercial traders," Working Papers 44, Austrian Foundation for Development Research (ÖFSE).
    3. Staritz, Cornelia, 2012. "Financial markets and the commodity price boom: Causes and implications for developing countries," Working Papers 30, Austrian Foundation for Development Research (ÖFSE).
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