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The sustainability of the interaction between Financial and commodity markets

Author

Listed:
  • Amedeo De Cesari
  • Maria Leone
  • Alberto Manelli
  • Roberta Pace

Abstract

In the last ten years, the price of raw materials showed wide fluctuation and an increase in volatility. The volatility in the agricultural commodity market has aroused greatest interest because the prices of food commodities influence the survival of the people. Different studies have led different conclusions about the causes of these fluctuations. Some, following the Masters hypothesis, indicate in the increase of the speculative activity the determinant of such fluctuations. Others, instead, are critically and reported the inconsistencies of Masters hypothesis. In the following article, we analyze the wheat market, the different hypothesis of that have been proposed to explain price fluctuation and, implementing a regression analysis, we prove the uses of basis by the buyer, reseller and merchandiser of grain to achieve a profitable margin or minimize risks.

Suggested Citation

  • Amedeo De Cesari & Maria Leone & Alberto Manelli & Roberta Pace, 2018. "The sustainability of the interaction between Financial and commodity markets," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(2), pages 133-153.
    • Handle: RePEc:fan:rissri:v:html10.3280/riss2018-002009
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    References listed on IDEAS

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    1. Irwin, Scott H. & Sanders, Dwight R., 2012. "Financialization and Structural Change in Commodity Futures Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 44(3), pages 371-396, August.
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    3. Irwin, Scott H. & Sanders, Dwight R. & Merrin, Robert P., 2009. "Devil or Angel? The Role of Speculation in the Recent Commodity Price Boom (and Bust)," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(2), August.
    4. Huchet, Nicolas & Fam, Papa Gueye, 2016. "The role of speculation in international futures markets on commodity prices," Research in International Business and Finance, Elsevier, vol. 37(C), pages 49-65.
    5. Scott H. Irwin & Dwight R. Sanders, 2010. "The Impact of Index and Swap Funds on Commodity Futures Markets: Preliminary Results," OECD Food, Agriculture and Fisheries Papers 27, OECD Publishing.
    6. Working, Holbrook, 1960. "Speculation on Hedging Markets," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 1(2), pages 1-36.
    7. Baffes, John & Dennis, Allen, 2013. "Long-term drivers of food prices," Policy Research Working Paper Series 6455, The World Bank.
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    Cited by:

    1. Zoia Sokolovska & Oksana Klepikova & Tetiana Cherkasova, 2019. "An insurance company as an element of sustainable development of the state socio-economic system: Ukraine insurance companies case study," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(2), pages 53-72.

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