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Jobrosrule

How can you calculate how much a commodities price is the result of speculation?

There are good arguments for why food and gas prices going up, like increased consumption by China and India. I wonder how much these price increases are affected by speculation in futures markets as opposed to good old supply and demand?
Russ:

Futures contract DO have an effect on commodity prices, but less than many think. They are bets on where the prices may go (Long or Short) , and have little real effect on current prices, except that the spot price may rise if the future price rises considerably, as demand may rise.

.:

this is an example of fear buying. future prices are driven up by fear of supply which in turn creates more fear...just old fashioned hoarding, just set in the future...
of course, those that have bought futures have a vested interest in keeping supplies tight otherwise they stand to lose their shirts...
despite the great stress placed on corn by ethanol there still remains a four year supply of grains worldwide, and more in the usa. this isn't the info televised, but a simple check of reserves will prove it...
if australia continues with its drought, which seems likely, then a deficit will occur in wheat. there is a new strand of rice blight in china, one there is no solution for at present...
given all these factors i see no reduction in grain prices, ever...but don't put the cart ahead of the horse...
remember, futures contracts were developed as a method of guaranteeing stable prices for farmers who were being whiplashed into bankruptcy by price fluctuations. by the time they got a crop to market during a bumper year their price didn't cover costs. with futures they could assure themselves of a constant price, regardless of yield. one of the major advancements of modern economics...
otherwise, what russ said....

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