Liquidity within commodity markets is expected to increase as a range of new entrants begins to move into the market, according to ABN AMRO. But the trading patterns of some types of investor will also bring the greater price volatility more familiar to financial markets.
Speaking at ABN AMRO’s latest overview of the commodities market, David Phipps, Head of Commodities at ABN AMRO explained that commodities have now become ‘fashionable’ as an investment vehicle. Discussing the changing drivers to supply and demand of underlying commodities, he suggested that following the entry of hedge funds, demand could in the future be fuelled by pension funds in basket-type trades.
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