Demand for commodities from speculative investment vehicles was a double-edged sword. On one side, it created higher than average price levels as vast pools of money flooded into commodity markets ill-equipped to handle the increased order flow without a price reaction. On the other side, the money flow created a divergence between futures and the underlying cash values, resulting in cash flow problems for bona-fide hedgers as they could no longer rely on futures as a representative market-oriented hedge. As an unexpected outcome, producers were unable to capture much of the price increases seen during the commodity bubble due to the reluctance of hedgers to put on forward positions that required deferred hedges in these new questionable futures markets. In short, the market didn't work for the actual commodity players; it worked for the financial investors.
展开▼
