Commodity markets are historically the place where farmers get a guaranteed return on their crops before the harvest or where companies, such as those in the airline and trucking industry, hedge against rising fuel prices over the busy summer travel months. More recently, institutional investors pension plans, mutual funds and hedge funds have been buying futures contracts in much greater volume, protecting themselves against inflation or simply trying to turn a profit while other markets stagnate. But these investors tend to buy a basket of different commodities, not just a single investment in, say, crude oil or corn. They also hold these investments much longer than a farmer or a typical commodity trader might. As a result of this new infusion of money, trading volume in these [commodity] markets has quintupled over the past few years, according to federal regulators. Walter Lukken, the acting chairman of the U.S. Commodity Futures Trading Commission, recently told Congress that $5 trillion flows through U.S. exchanges and other domestic clearinghouses each day. Many Democrats argue that this sharp uptick in trading volume has driven up gas prices and with them, the prices consumers pay for just about everything else they buy.
Source: Patrick O'Connor, Dems' new gas-pump villain: Speculators July 8, 2008 08:02 AM EST http://www.politico.com/news/stories/0708/11583.html