Futures trading

[Tempest]

Quote:
And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics' belief that futures trading diminishes extreme price swings. Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

http://money.cnn.com/2008/06/27/news/eco...sion=2008062713

Quote:
The bottom chart above shows the monthly percentage changes in oil prices and onions prices. Between 2000 and 2011, onion prices have been 7 times more volatile than oil prices, based on the difference in the standard deviations of monthly price changes.

http://mjperry.blogspot.com/2011/05/what-can-onions-teach-us-about-oil.html

And:
Quote:
Since commodity futures trading began in India in 2003, many politicians have been asking for bans against it to prevent speculators from pushing the prices up. The move to impose bans is also becoming a sign that the government is determined to curb rising prices.

However, a 2008 report released by a government-appointed panel reveals no statistical evidence that agricultural commodity futures are responsible for the climbing prices. Related data even show that in recent years, commodity prices usually did not drop after the government prohibited commodity futures trading.

In addition to sugar, India also halted futures trading in wheat, rice and two kinds of lentils in early 2007. The trading was not restored until 2009. The two kinds of lentils – pigeon peas and black matpe beans – saw their prices almost double while the ban was in practice, since the local production failed to meet the rising amount of consumption.

http://www.india-briefing.com/news/india-resumes-sugar-futures-trading-4586.html/

So for those that think futures markets and speculators are the problem with oil prices, you might want to look somewhere else.

 

[HTSS_TR]

In the short term, few weeks to few months, futures markets and speculators are the problem with oil prices. But in long term, years and decades, oil price is more stabled with future investors.

 

[Burt]

Futures trading is a zero sum game. For every person that bets prices are going to be high, there is a person on the other side betting that they will be low.

 

[buster]

http://pragcap.com/howard-schultz-the-commodity-rally-is-fake

 

[Al]

Originally Posted By: Burt
Futures trading is a zero sum game. For every person that bets prices are going to be high, there is a person on the other side betting that they will be low.
Not exactly (in a runup) bc as buyers line up..sellers are selling that already made a few bucks. And then the buying pressure continues to run up that price up until the new guy backs out with a profit..etc, etc, etc.

Originally Posted By: HTSS_TR
In the short term, few weeks to few months, futures markets and speculators are the problem with oil prices. But in long term, years and decades, oil price is more stabled with future investors.


Exactly.