Speculation and Volatility
A new study released by Informa Economics finds that it is impossible to assign a cause to the increased volatility experienced by commodity markets over the past several years. "Perhaps increased participation by these groups [e.g., index traders and money managers] resulted in increased volatility. Alternatively, higher volatility may have attracted money from these groups into these markets." A copy of the study can be found here.
Interestingly, it notes that natural gas and crude oil markets showed much less evidence of increased volatility than grain contracts.
