A senior CFTC official today told Congress there is no evidence that speculators are driving a range of commodities prices to new highs.
“All the data modeling and analysis we have done to date indicates there is little economic evidence to demonstrate that prices are being systematically driven by speculators in these markets,” CFTC Chief Economist Jeffrey Harris, chief economist of the Commodity Futures Trading Commission, said in prepared remarks to the House Committee on Agriculture.
“Speculators provide valuable liquidity and information to the futures markets, and this helps reduce the costs of hedging and risk transfer for market participants,” Mr. Harris also said, noting the recent influx of institutional investors into commodities.
He cited various commodities data analysis conducted by the CFTC market surveillance unit, headed by director John Fenton.
“Commodity price levels, including agriculture commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand,” Mr. Harris also said, citing increase demand from emerging markets, lower supply because to of weather and geopolitical disruptions, and a weaker dollar. He described the combination of these factors as a “perfect storm.”
