The Financialization of the Commodity Markets 2011-2016

Abstract

In the paper we describe and analyze financialization of commodity markets in EU countries and in the USA. This inflow of investment capital on commodity derivatives market, observed for the past twenty years, is often blamed for the changes in the markets’ microstructure, resulting in the detachment of the commodity prices from its underlying intrinsic value. We use correlation analysis and VAR Models to verify the significance of the financial investors’ actions on the commodity prices for the period from 2000 to 2017 and in more extensive analysis from 2011 to 2016, as we try to prove this is the transitional period for commodity markets. Our findings show that the influence of financial investors on the commodity prices is observed for the EU countries as well as the USA.