Peter Cohan on commodities speculation at the CME

Peter Cohan, president of Peter S. Cohan and Associates and contributor for Forbes.com, discusses with Benzinga's Luke Lavanway the cause of high commodity prices that are hurting consumers at the gas pump and the supermarket: excessive speculation. 81% of oil trading is done by speculators who treat the commodities exchange like a stock market with no intention to take physical possession of the goods they purchase bills for. As a result, commodities prices have been subject to the whims of easy capital flow that can make equities markets so unstable. But unlike in equities markets, commodities have a direct effect on the prices of necessities for consumers.

According to Cohan, notice is finally being taken of excessive commodities speculation and its effects on prices for the consumer. The Chicago Mercantile Exchange has increased its margin requirements, bringing oil prices down. And the Justice Department has founded a task force to monitor oil and gas markets for potential wrongdoing.

Be sure to check out the audio of the interview in its entirety: Peter Cohan on commodities speculation at the CME

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