A more rigorous evaluation of these data demonstrates that, even if one accepts that any correlation between speculative activity and price movements means that the speculation caused the price movement, and speculation drove prices away from their appropriate levels, the noncommercial trader position data do not support claims that speculation forced commodity prices sharply higher in the period ending in the summer of 2008.
Noncommercial traders are those who do not handle physical commodities in the ordinary course of business.
The long position of the noncommercial traders
is at all-time high levels, which provides for an extremely limited potential of building up the long positions, which will hold back the quotes strengthening.
This was shown by the figures in the Commitments of Traders report released last week by the US Commodity Futures Trading Commission, a closely watched data set which shows the relative buy and sell positions of the largest commercial and noncommercial traders
Noncommercial traders are described as speculators, or firms taking positions in the futures market not as a hedge but as speculation on exchange rate movements.
The distinction between commercial and noncommercial traders is based on how firms identify themselves to the CFTC, which in turn monitors firms to verify their self-designation.