The Benefits Of Speculation In Agricultural Commodities Market Investment

Imagine a water well in a semiarid region, where its level depends on rainfall to maintain a vital quantity for consumption. If in moments of good level, that water was freely used, will certainly waste, such as bathrooms, cleaning, among other uses. They may in time of drought, not having enough to desedentacion human / animal. This situation could be avoided, placing cost-limiting its consumption. When perceived the level of accumulated reserves may be insufficient, its consumption should be reduced in proportion, which would regulate the use and maintain a minimum reserve.

Article developed by the time of the same can happen with food, basic survival, as well as water from that well. Taking stock prices low, many go to consume more than would be necessary to satisfy healthy. So at some point, there could be lack of food for human nutrition worldwide, with some catastrophic, occurred there. Just because the market tends to self-correct if, precificando-whether under the stage. By making food in a situation of expected future shortages are expected to need extra consumption is stopped or reduced. To be sure, many maintain their consumption, increasing their costs, but in the mean, there is a reduction in expected demand and a tendency to return to equilibrium. Together with a reduction in consumption due to high price, there will be financial incentive for cultivation, increasing the supply and regulating the balance of human consumption.

On the dark side of speculative activity is the formation of large financial groups, which fall "flushing" or enxaguando "commodities market, without any basis for such. By doing so, a movement in an attempt to manipulate prices to infer achievements or misinterpretations of the stage. However, in this situation, other traders with good foundations to counteract this phenomenon, brought to market with counter derivative positions, making gain from such distortions to the detriment of the damage of the counterparty. With the speed and reliability of the information at the present time, it is unlikely that an attempt to distort the market for "firepower" of some, come the end auferir achievements for their bettors.