Mastering the Commodities Markets

BACKGROUND AND CONTEXT

Derivatives in the commodities markets are continually receiving bad press. The practitioners who trade futures especially are being blamed for everything from global financial meltdown to increasing the price of food in the shops and fuel at the pumps.

I recall a statistic from the CNN news programme that aired in April 2009, when it was noted that in the previous year 27 barrels of crude oil were being traded on the New York Mercantile Exchange (NYMEX – now part of CME) for every barrel of oil consumed in the United States. The reporter was referring to crude oil futures contracts and if the comment is expanded to total futures traded globally compared with worldwide oil production, the multiplier is now much higher. ...