Contango Fango: The languid state of oil & commodity prices
The Buttonwood piece cites several reasons for why commodity prices are in a slump and also debunks some reasons that have been offered up for the current languidness of oil and copper prices. As I had suggested in the 'Glenn Gould ...' blog post, the slump probably has more to do with the fickleness of speculative capital than any of the rationales that have been offered up. Buttonwood concurs. As the article points out, speculation in commodities futures created a phenomena known as 'contango' -- where roll yields are negative (i.e., futures prices are higher than spot prices) and futures investors had a harder time making a profit (since they can't count on futures prices to rise to future spot prices). Factoring this in means that commodities speculators lost money even if the spot prices of commodities had remained high (and even that might no longer be true).