Financial Investors in International Raw Materials and Food Markets and Price Movements of Those Commodities

Abstract

In the paper an attempt is made to analyse the impact of the involvement of financial investors on primary commodity prices in the international market. This phenomenon has been identified as a relatively new yet important attribute of the contemporary world economy. The activity of financial investors has affected the raw materials markets in a way that makes them resemble financial markets. As a consequence, the global financial crisis has been reflected not only in price drops for financial assets (shares, real estate) but also in a slump in the prices of raw materials and food in the international market.

The Research on the Impact of the Changes of Commodity Price Level in the World Commodity Exchanges on Variation of General Price Level

“…Ghoshray et al (2014) in their work pointed out that given the fact that many developing countries are dependent on commodity prices as their main source of income, the issue of trends in commodity prices in relation to manufactures has been of great interest in the trade and development economics literature and a strand of theoretical research argues that commodity prices should be stationary, due to the biological nature of production, storage and arbitrage. The price movements of commodities as well were analysed by Dudzinski (2010). Cashin et al (2002) analysed empirical evidence that has generated several stylized facts about real commodity prices: they are often dominated by long periods of doldrums punctuated by sharp upward spikes (Deaton & Laroque, 1992); they have a tendency to trend down in the long run (Grilli & Yang, 1988); shocks to commodity prices tend to persist for several years at a time (Cashin et al, 1999); and unrelated commodity prices move together (Pindyck & Rotemberg, 1990).…”

Seasonal patterns in oil prices and their implications for investors

“…However, commodities are not only simple inputs, they are also investment assets that are in the middle of attention of numerous retail as well as institutional investors. This is why commodity markets and various factors affecting commodity prices are studied by many economists (Androniceanu, & Popescu, 2017;Balaz, & Zabojnik, 2010;Burciu, 2017;Dudzinski, 2010;Back et al, 2013;Smiech et al, 2015;Vychytilova, 2015;Han et al, 2016;Karyotis, & Alijani, 2016;Bianchi et al, 2016;Huchet & Fam, 2016;Ntananamis, & Zhou, 2016;Pirrong, 2017;Ghoddusi, & Emamzadehfard, 2017;Olah el al., 2017 etc. ;Simionescu, 2017;Vovk, I., Vovk, Y., & Lyashuk, O., 2017).…”