Untitled

Does Commodity Indexation Distort Futures Markets?
A subtle reason why commodity prices may not be reflective only of individual supply/demand balances and inflationary expectations is the changing nature of commodity futures markets themselves. Long-only commodity index funds are capable of distorting both commodity prices and the forward curves of futures markets. Paradoxically, the resulting higher prices in the short-term may lead to lower prices in the long-term.