Financialization of Commodity Markets and Price Signals; Should the Producers be Listening? by Masuma Farooki

Abstract

Since the early 2000s the influx of financial actors, the increasing volume of investment in base metal markets and their impact on price, have been met with increasing concern by commodity producers and consumers. Although much has been reported in the press of the impact of ‘speculative’ activity on metal prices, the motivation and investment strategies of these actors remains less clear.

This seminar profiles the new investors, tools and strategies leading to the increased financialization of commodity markets and explores the possibility of a disconnect emerging between the physical and financial determinants of commodity price. We then contrast the role of price signals with other determinants of commodity production, elucidating the difference between the physical and financial vectors and how these are changing over time.

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