› › The Impact Of Speculation On Commodity Futures A Review Of The Findings Of 100 Empirical Studies

The Impact of Speculation on Commodity Futures - A Review of the Findings of 100 Empirical Studies

Author : Marco Haase

Publisher :

Page : 19 pages

File Size : 45,99 MB

Release : 2016

Category :

ISBN :

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Book Description

There are numerous empirical studies on the impact of speculation on commodity futures prices. The papers strongly differ in terms of the focus variable (e.g. price, volatility, spillover effects) of speculative effects, the speculation measure used, and their methodological sophistication and quality. We review and evaluate the methodology and results of 100 papers which have been published (or are at least frequently quoted) on this subject over the past decade. While the overall picture indicates that the number of studies which report reinforcing and weakening effects is about the same, the results shift in favor of finding (clear or mixed) weakening effects if studies use direct measures of speculation.



Does Speculation Drive Commodity Prices? Evidence from the Market for Corn

Author : Niklas Humann

Publisher : GRIN Verlag

Page : 46 pages

File Size : 37,14 MB

Release : 2021-09-22

Category : Business & Economics

ISBN : 3346496171

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Book Description

Seminar paper from the year 2020 in the subject Economics - Finance, grade: 1,0, University of Münster, language: English, abstract: This seminar paper reviews the literature on futures markets as well as the recent food crisis and presents an empirical investigation of the influence of (index) speculation on the corn price. My findings are in line with most of the other empirical conclusions that, rather than speculation, factors from the real and monetary economy played a role in the spike of commodity prices. For centuries, corn has been one of the most produced crops in the world, used to feed people, livestock and machines. During the last quarter of the twentieth-century, world food prices declined by more than 50 percent, thereby improving the nourishment of people all over the world. However, this extensive decline also raised calls for protectionist policies, aimed at defending the welfare of commodity producers. Starting in the early 2000s, all classes of commodities have experienced hefty price increases. The price for corn increased by more than 250 percent in roughly three years (2005-2008). The resulting food crisis devastated low-income communities around the globe, with the already large part of their income they spent on food becoming even more substantial, causing hunger and malnutrition. While a variety of explanations for this crisis have been offered, some were quick to blame excessive (index) speculation.



Speculation by Commodity Index Funds

Author : Scott H. Irwin

Publisher : CABI

Page : 279 pages

File Size : 48,74 MB

Release : 2023-04-25

Category : Business & Economics

ISBN : 1800622082

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Book Description

Commodity futures prices exploded in 2007-2008 and concerns about a new type of speculative participant in commodity futures markets began to emerge. The main argument was that unprecedented buying pressure from new "commodity index" investors created massive bubbles that resulted in prices substantially exceeding fundamental value. At the time, it was not uncommon to link concerns about speculation and high prices to world hunger, food crises, and civil unrest. Naturally, this outcry resulted in numerous regulatory proposals to restrict speculation in commodity futures markets. This book presents important research on the impact of index investment on commodity futures prices that the authors conducted over the last fifteen years. The eleven articles presented in the book follow the timeline of our involvement in the world-wide debate about index funds as it evolved after 2007. We also include an introductory chapter, new author forewords for each article chapter, and a lessons learned chapter to round out the book. Policy-makers, researchers, and market participants will find the book not only functions as useful documentation of the debate; but, also as a natural starting point when high commodity prices inevitably create the next speculation backlash.



Commodities

Author : H. Kent Baker

Publisher : Oxford University Press

Page : 681 pages

File Size : 30,94 MB

Release : 2018-03-06

Category : Business & Economics

ISBN : 0190656034

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Book Description

Commodities: Markets, Performance, and Strategies provides a comprehensive view of commodity markets by describing and analyzing historical commodity performance, vehicles for investing in commodities, portfolio strategies, and current topics. It begins with the basics of commodity markets and various investment vehicles. The book then highlights the unique risk and return profiles of commodity investments, along with the dangers from mismanaged risk practices. The book also provides important insights into recent developments, including high frequency trading, financialization, and the emergence of virtual currencies as commodities. Readers of Commodities: Markets, Performance, and Strategies can gain an in-depth understanding about the multiple dimensions of commodity investing from experts from around the world. Commodity markets can be accessed with products that create unique risk and return dynamics for investors worldwide. The authors provide insights in a range of areas, from the economics of supply and demand for individual physical commodities through the financial products used to gain exposure to commodities. The book balances useful practical advice on commodity exposure while exposing the reader to various pitfalls inherent in these markets. Readers interested in a basic understanding will benefit as will those looking for more in-depth presentations of specific areas within commodity markets. Overall, Commodities: Markets, Performance, and Strategies provides a fresh look at the myriad dimensions of investing in these globally important markets.



The Influence of Commodity Speculation on Commodity Price Development

Author : Nicolas Schreiber

Publisher : GRIN Verlag

Page : 69 pages

File Size : 47,73 MB

Release : 2016-07-15

Category : Business & Economics

ISBN : 3668261016

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Book Description

Bachelorarbeit aus dem Jahr 2014 im Fachbereich BWL - Bank, Börse, Versicherung, Johann Wolfgang Goethe-Universität Frankfurt am Main, Sprache: Deutsch, Abstract: Commodity prices have been rising significantly since the early 2000s with price growth reaching its fastest pace between 2006 and 2008. While nearly all commodities were hit by the aforementioned price spikes, price spikes where particularly pronounced for mineral commodities. For the most part of recent research two different approaches are applied to measure the impact of speculation on price development. The first one examines if there is any change in commodity price development due to the aforementioned increased financialization of commodity markets, whereas the second one compares the behavior of commodity prices with and without an existing futures market. This thesis combines both approaches and tests the hypotheses that either the first-time introduction of derivatives or the introductions of regulatory governmental acts that facilitate speculative index investment in commodities have significant effects on commodity price development by the example of copper traded on US-based exchanges. For this purpose, relevant copper price characteristics will be analyzed before and after possibly speculation-conducive events (i.e. the introduction of copper futures trading and two selected acts) for the period from 1971 to 2010. Furthermore, following Tang and Xiong (2012), this thesis examines if the introduction of governmental acts of the aforementioned type induces an increased market integration of non-energy commodity markets. This is of particular interest as market integration can at times induce increased volatility spillovers between the respective markets (Tang & Xiong, 2012). The first part of this work gives a short overview of the technical background necessary to understand the relationship between commodity prices and speculation. The second part provides a general review of related literature and research on the relationship between commodity prices and speculation. The third part focuses on the methodology of the empirical analysis. The fourth part of this work presents the results and is followed by the conclusion in part five.





Does speculation with agricultural commodity futures cause price bubbles in the event of negative production shocks?

Author : Tobias Thürer

Publisher : Logos Verlag Berlin GmbH

Page : 222 pages

File Size : 21,7 MB

Release : 2016-02-05

Category : Business & Economics

ISBN : 3832538763

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Book Description

Since the mid 2000s, an increasing financialization of commodity futures markets is taking place. This has fueled an ongoing discussion about the effect of financial investments on the development of commodity prices. Against this background, the trading activities of financial speculators also come to the fore. There is the concern that such speculators can cause irrational overshootings of agricultural commodity prices, e.g. in the event of global production shocks. In such an event the decrease of total supply induces a price surge menacing food security in developing countries. Yet, the question emerges whether speculation aggravates this price increase, eventually inducing a price bubble. The relevance of this concern is reinforced by the fact that due to climate change an increased frequency and severity of global agricultural production shortfalls is at stake. If speculation evokes an additional threat to food security in the event of a production shock, the political agenda should not be confined to focus solely on the adaptation to climate change. Instead, it is then also necessary to address speculative activities on agricultural commodity markets. This book scrutinises whether speculative bubbles can be identified in the event of severe global production shocks. For this, a framework for tracing the transmission of the futures price's development on the spot market is developed. Using annual data from 1979-2012 for maize it is analysed whether production shock related price bubbles occurred.





Contemporary Trends and Challenges in Finance

Author : Krzysztof Jajuga

Publisher : Springer

Page : 214 pages

File Size : 36,20 MB

Release : 2019-05-07

Category : Business & Economics

ISBN : 3030155811

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Book Description

This volume features a selection of contributions presented at the 2018 Wroclaw Conference in Finance, which cover a wide range of topics in finance and financial economics, e.g. financial markets; monetary policy; corporate, personal and public finance; and risk management and insurance. Reflecting the diversity and richness of research areas in the field, the papers discuss both fundamental and applied finance, and offer a detailed analysis of current financial-market problems, including specifics of the Polish and Central European markets. They also examine the results of advanced financial modeling. Accordingly, the proceedings offer a valuable resource for researchers at universities and policy institutions, as well as graduate students and practitioners in economics and finance at both private and government organizations.



A Handbook of Primary Commodities in the Global Economy

Author : Marian Radetzki

Publisher : Cambridge University Press

Page : 331 pages

File Size : 37,7 MB

Release : 2020-11-26

Category : Business & Economics

ISBN : 1108896286

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Book Description

The dramatic price falls of 2014–2015 marked the end of the most powerful and enduring commodity boom since the Second World War. Now in its third edition, this book acts as a guide to the ins and outs of the primary commodity universe. Updates to this edition reflect on the consequences of both China's economic slowdown as its industrialization enters a new, less commodity demanding phase, and changes in the USA's trade policy under the Trump administration. Additionally, this edition takes into account recent developments in world oil markets and examines the effects of increased climate concerns. The authors introduce and explain pertinent issues surrounding international commodity markets such as the global geography of raw materials, price formation, price trends, the role of commodity exchanges, the threat of depletion, cartel action, state ownership, emerging commodity nationalism and more.