The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Speculation about causes

High food prices have made the rise of agricultural commodity prices a politically controversial issue. One of the most controversial elements has been the role of investors, particularly hedge funds, in futures markets, which have been blamed for high prices by some observers.

Feast and famine as food prices soar

Emission control’s neglected area

Getting microfinance to the farmers

Although there have been isolated incidents of market manipulation in commodity futures markets, such as Amaranth’s ill-fated activities in the US natural gas market in 2007, investors and hedge funds are less significant players than many believe. A study by Barclays Capital in July found that the amount being invested in commodity markets was greatly exaggerated, and a recent study by consultancy Celent found that hedge funds account for only 10% to 20% of transactions, far less than investment banks.

An IMF study in 2006 concluded that price causality ran, in general, from spot prices to financial flows, implying that higher spot prices are the cause rather than the effect of increased investor participation.

A 2008 OECD study, however, observed that commodity futures and cash markets had on occasion failed to converge and that: "Conceivably, it could also be due to the ‘inflation’ of futures prices being caused by increasingly large long positions placed by institutional investors."

Although speculators might help to drive intra-seasonal price trends, there is no evidence that they are doing anything like hoarding physical supplies that could affect inter-seasonal prices.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree