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Price Formation in Commodities Markets
Report

Price Formation in Commodities Markets

Financialisation and Beyond

Diego Valiante and Christian Egenhofer
CEP Press, 2013
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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Commodity prices always have been volatile; however, since the turn of the 21st century, the financial markets’ influence has meant that commodity-specific factors alone no longer explain this volatility. The Centre for European Policy Studies experts Diego Valiante and Christian Egenhofer analyze the developments that have made the prices of everyday commodities subject to the same shocks as prices in financial markets. They warn that this interconnection poses profound risks to the real economy. getAbstract finds that this comprehensive report on global commodities provides a solid introduction to – as well as an in-depth study of – a complex marketplace and recommends it to financial executives, policy makers and investors looking to understand how commodities trading has become so intertwined with the financial markets.

Take-Aways

  • Commodities trading has taken off since 2000, fueled by globalization, trade liberalization and accommodative monetary policies.
  • Demand from emerging markets, particularly China, has contributed to this growth.
  • Varying features and aspects of different commodities affect their prices.

About the Authors

Diego Valiante heads research at the European Capital Markets Institute, part of the Centre for European Policy Studies (CEPS), a think tank specializing in EU affairs. Christian Egenhofer, a visiting professor at several European universities, is a senior research fellow and head of CEPS’s energy and climate program.

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