The United Nations Commission on Trade and Development devoted a chapter in its trade and development report to “the financialisation of commodity markets”.
It wrote: “Commodity prices, stock prices and the exchange rates of currencies affected by carry trade speculation moved in parallel during much of the period of the commodity price hike in 2005-08, during the subsequent sharp correction in the second half of 2008 and again during the rebound phase in the second quarter of 2009.”
The “herd behaviour” of many participants reinforced impulses to sell positions in commodity futures when prices began to fall. Financial investors treated commodities “increasingly as an alternative asset class to optimise the risk-return profile of their portfolios” and paid “little attention to fundamental supply and demand relationships in the markets for specific commodities”.
I'm not so sure. If this were the case, there would be easy profits to make from contrarian views. Where are these profits?