On Futures Markets Convergence to Spot Prices
This is a bit wonkish. It also contains a lot of preliminary thinking on my part, so caveat emptor. If I'm wrong about any of this, I'll owe up to it sooner or later, and hopefully sooner. Futures markets are super useful things. They allow a farmer to lock in a selling price for his grain before incurring all his production expenses, thereby limiting his risk. And they allow an ethanol plant manager to lock in her buying price for grain before scheduling a delivery of fuel, thereby limiting the ethanol plant's risk. Thus, futures markets are generally wonderful things, allowing people to coordinate and plan production and consumption a little better over time, and thereby improving the efficiency of markets. In recent years there has been a big inflow of money from Wall Street into commodity futures. Basically, there is a ton of money out there looking for someplace to hide in the crazy, fearful world of international financial markets. Commodities h