Posted by: usset001 | April 18, 2012

The speculators control oil (and orange juice?) markets

My course lecture yesterday was on speculation and speculators, and the timing could not be better. It coincided with bold pronouncements concerning oil markets and prices: Obama proposes new action on oil speculation.” On the topic of what drives oil prices, the President and Bill O’Reilly agree – the speculators are doing it.

The CFTC COT (Commitments of Traders) report shows that since the start of the year, speculators – swap dealers, managed money and other reportables – have controlled 32-36% of the long positions in the crude oil futures market. Crude oil prices remain high at over $100, but essentially unchanged since the start of the year. The COT report also shows that over the same period of time, these same speculators have controlled 62-70% of the long positions in the orange juice market. Orange juice futures are currently trading at prices 25% lower than their January highs.

If the speculators are so powerful and manipulative, why are they doing such a lousy job in orange juice?


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