Financial Markets

This article in Barron’s looks at the participants in the commodities futures markets.

The agricultural futures markets were developed mainly at the CBOT(Chicago Board of Trade) in Chicago so farmers could hedge their risk on farm product prices. Today the markets are driven by speculators: investment banks, hedge funds etc. who are driving the prices higher . .  with little or no relationship to the cost of producing these farm products. So when you visit you supermarket to buy food, think about the increasingly large cut that “Wall Street” extracts from your food budget . . . . .

Commodities: Who’s Behind the Boom?

By GENE EPSTEIN

CHINA, AS EVERYONE KNOWS, IS A BIG FORCE IN THE extraordinary boom in commodities. Its voracious appetite for everything from corn and wheat to copper and oil has helped push up U.S. commodities prices by some 50% over the past 12 months.

But China is by no means the whole story. Speculators — including small investors — are also playing a huge role.