 Traders’ motivation and hedging pressure in commodity futures marketsDavid Bosch and K. Smimou Research in International Business and Finance, 2022, vol. 59, issue C Abstract: This study seeks to explain the major drivers of trading activity in commodity futures markets and gage the effect of trading activity on commodity prices. Rather than concentrating on a specific commodity subgroup or a particular type of commodity traders, we provide an extensive overview of the behavior across all market participants and their influence on commodity prices by using a broad set of commodity futures contracts. Although commodity futures returns show co-movement with financial fundamentals (U.S. dollar index, equity, and bond markets), based on the Disaggregated Commitment of Traders Report (DCOT), this relationship cannot be attributed to trading activity. Pricing in commodity markets can be predominantly attributed to hedgers and influential speculators (money managers), whereas small speculators (nonreportable traders) are crucial to some soft commodity futures similar to dealers in metals commodity futures. Furthermore, we find limited cases where inventory changes exert a sizable influence on position changes of DCOT traders. Keywords: Hedgers; Speculators; Motivation; Interaction; Futures prices; Commodity markets (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:59:y:2022:i:c:s0275531921001501 DOI: 10.1016/j.ribaf.2021.101529 Access Statistics for this article Research in International Business and Finance is currently edited by T. Lagoarde Segot More articles in Research in International Business and Finance from Elsevier |
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