How does this illustration make you feel about current commodity price levels? (Absolute Returns Letter May 2010)

This figure has been extracted from the Absolute Returns Newsletter 05-2010.  The letter is focused on a detailed look at commodities (9 pages in total).  Figure 4 is an illustration of the explosion in financial interest in commodities versus physical interest, for the combined oil markets.

The newsletter goes on to say that some may argue that the financial demand has NOT affected prices.  In response, they present Figure 5 which depicts the WTI oil price
against total assets under management in passive commodity linked strategies as further indication that while the degree of influence may be debatable, the relationship does reappear intact.

As similar relationship is exhibited in export demand versus financial demand for an array of other commodities from agriculture, mining and energy.  In fact, OTC contracts dwarf export demand by almost 10X.


READ FULL NEWSLETTER HERE