The morality of a commodity fund

xWallStreet's picture
Rank: Monkey | 60

Hi! Been trading commodities for a few years now.

Have heard that futures trading has adverse effects on the developing markets where a lot of commodities are produce using labour in less than perfect condition.

Would like to know your thought on if it's morally perfect and is positive for all involved in the actual procurement of the commodities to trade commodity futures?

Comments (25)

Most Helpful
Apr 10, 2019

Can you imagine what those folks would be left to without the global reach of commodities?

Apr 10, 2019

Not entirely sure what you are getting at. Futures should smooth out the procurement experience which is a net positive for people working on the production size. Some research points to speculative activity in derivatives elevating price levels but the negative impact would be felt by consumers in that case.

    • 1
Apr 11, 2019

there are no adverse effects...whoever told you that has no clue what they are talking about

just google it...you're welcome

Apr 11, 2019

Can it have an inflationary effect on the actual consumers? Due to speculative activity. Especially around crop reports.

Apr 11, 2019

no...futures markets and speculators provide liquidity and price discovery

imagine a world without those 2 things? everybody loses

just google it...you're welcome

    • 1
Apr 12, 2019

If you want to question morality, look at the Petrodollar system which allows America to outsource its inflation to developing countries. This system is enforced by endless war in the Middle East.

    • 2
Apr 12, 2019

Damn son, that shit slaps.

Apr 12, 2019

Google "countries without a central bank" and follow that rabbit hole down.

    • 2
Apr 12, 2019

Yeah stop buying their commodities, that will lift them out of poverty.

    • 1
Apr 12, 2019

It's more complicated than that due to currency. America offloads normalized depreciation of the $USD from increases in the money supply to developing countries by waging war on any ME nation that dares to sell fossil fuels in non-dollar currency.

Apr 14, 2019

That's more in line with what I'm curious about.

Apr 12, 2019

I'm assuming your view point here is comming from all the articles recently about coffee and milk producers being hurt by a slump in futures prices. In both cases that slump is caused by oversupply. The oversupply is caused by stupid government attempts to manipulate the market. So maybe instead of asking yourself if commodities are immoral you should be asking yourself if the government actions are moral.

Array

Apr 12, 2019

Is that why Cafe Grumpy is always out of Oatly?

Funniest
Apr 12, 2019

You've been speaking with Bernie?

    • 5
Apr 14, 2019

Nah.

Apr 12, 2019

I mean, probably the only real impact is helping stabilize prices. Wouldn't say you're hurting anyone, not like you're doing gods work either. I think the more disconcerting thing is having absolutely no impact on society what-so-ever and strictly engaging with your Bloomberg terminal.

"So Johnny, what do you do for a living?"
"Uhhh, I fuckin sit behind my computer and bet on cattle prices in Indonesia"

    • 4
Apr 13, 2019

Aahahah

The name of the game, moving the money from the client's pocket to your pocket

Apr 14, 2019

Hahah.

    • 1
Apr 13, 2019

All joking aside, there are different studies about this topic and various publication. Speaking from my experience and point of view, we have seen in power markets how this plays in favour of consumers.

Let me explain, in European gas and power markets we have different levels of integrations, with month ahead markets more developed than day ahead.
Integration in the one-month-ahead markets is mainly driven by NBP hub, acting as referential hub, which suggests price convergence driven by financial trading rather than by physical balancing
On the other hand, day ahead is way more exposed to physical transmission

I think that for other commodities could be the same; ie implications related to the law of one price

TLDR, Financial derivatives are great tools in integrating markets and do not mine labour etc.

    • 2
Apr 14, 2019
Comment
Apr 19, 2019