unctad.org | Correlations between financial speculation and commodity prices
Correlations between financial speculation and commodity prices
18 September 2012
A strong correlation of the prices in several commodity markets with prices in other speculative financial markets as early as 2009 has been found by UNCTAD researchers. The findings are summarized in the latest UNCTAD policy brief, titled “Financialization is the root cause of oil and commodity price volatility.”


UNCTAD policy brief, No. 25
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The brief notes that the volume of exchange-traded derivatives on commodity markets is now 20 to 30 times larger than the physical production of the commodities concerned, and resulting rises and falls in prices – often pronounced -- cannot be explained alone by the forces of supply and demand.

The policy brief contends that “it is undeniable” that financial speculators “exert considerable influence on the price movements of those markets.”


 

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