Farm Commodity Price Stabilization through Futures Markets: Comment

1974 ◽  
Vol 56 (4) ◽  
pp. 827-828
Author(s):  
Wilfred Candler
Keyword(s):  
Futures Markets ◽  
Commodity Price ◽  
Price Stabilization

Farm Commodity Price Stabilization through Futures Markets

1973 ◽  
Vol 55 (2) ◽  
pp. 225-230
Author(s):  
Robert A. Richardson ◽  
Paul L. Farris
Keyword(s):  
Futures Markets ◽  
Commodity Price ◽  
Price Stabilization

Financialization of Commodity Markets

2018 ◽  
Author(s):  
Kyle J. Putnam
Keyword(s):  
Business Cycle ◽  
Futures Markets ◽  
Commodity Price ◽  
Commodity Markets ◽  
Commodity Futures ◽  
Futures Prices ◽  
Price Behavior ◽  
Risk And Return ◽  
Commodity Futures Markets ◽  
Asset Class

In the early 2000s, financial investors began pouring billions of dollars into the commodity futures markets seeking the unique investment benefits of this distinct asset class. This “financialization” process has called into question the fundamental risk and return properties of commodity futures as evidence has emerged favoring the idea that the massive increase in investor flows caused a rise in futures prices, volatility, and intra- and intermarket return correlations. However, a contrarian line of research contends that the effects of the new “speculative” capital on the futures markets are unsubstantiated and the increased participation of financial investors poses little consequence to the economics of the marketplace. This latter line of literature maintains that the investment benefits of commodity futures have not been diminished and that fundamental factors and business cycle variations can explain the observed changes in commodity price behavior.

scholarly journals Devil or Angel? The Role of Speculation in the Recent Commodity Price Boom (and Bust)

2009 ◽  
Vol 41 (2) ◽  
pp. 377-391 ◽  
Author(s):  
Scott H. Irwin ◽  
Dwight R. Sanders ◽  
Robert P. Merrin
Keyword(s):  
Futures Markets ◽  
Commodity Prices ◽  
Commodity Price ◽  
Commodity Futures ◽  
Index Funds ◽  
Crude Oil Prices ◽  
Price Boom ◽  
Commodity Futures Markets ◽  
Boom And Bust ◽  
Derivatives Markets

It is commonly asserted that speculative buying by index funds in commodity futures and over-the–counter derivatives markets created a “bubble“ in commodity prices, with the result that prices, and crude oil prices, in particular, far exceeded fundamental values at the peak. The purpose of this paper is to show that the bubble argument simply does not withstand close scrutiny. Four main points are explored. First, the arguments of bubble proponents are conceptually flawed and reflect fundamental and basic misunderstandings of how commodity futures markets actually work. Second, a number of facts about the situation in commodity markets are inconsistent with the existence of a substantial bubble in commodity prices. Third, available statistical evidence does not indicate that positions for any group in commodity futures markets, including long-only index funds, consistently lead futures price changes. Fourth, there is a historical pattern of attacks upon speculation during periods of extreme market volatility.

Factors Affecting Efficiency of Feeder Cattle Hedging in Kentucky

1977 ◽  
Vol 9 (1) ◽  
pp. 185-189 ◽  
Author(s):  
Stephen L. O'Bryan ◽  
Barry W. Bobst ◽  
Joe T. Davis
Keyword(s):  
Futures Markets ◽  
Price Volatility ◽  
Commodity Price ◽  
Oklahoma City ◽  
Futures Contracts ◽  
Cattle Production ◽  
Factors Affecting ◽  
Feeder Cattle ◽  
Ex Post ◽  
Commodity Price Volatility

Recent commodity price volatility and development of new futures contracts has kindled interest in hedging among farmers in many parts of the country. Due to the importance of feeder cattle production in Kentucky and in the South generally, recent development of a feeder cattle contract is of special interest. This paper addresses some potential problems associated with use of feeder cattle futures markets by Kentucky producers. Specifically, it tries to: (1) determine the effect, if any, of location basis variability on ex post hedging results in Kentucky markets versus delivery markets at Omaha and Oklahoma City, (2) assess the ability of hedging to reduce revenue variability as compared to cash marketing and (3) determining the presence of bias in feeder cattle futures prices.

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