Speculators and the price of commodities

Eighteen months ago the price of oil and other essential commodities was at record levels. There were riots in many parts of the world over food.

At the time, there was much talk of a raft of factors like political concerns in the Middle East and poor crops because of drought. And there were mutterings about speculation - but no hard evidence.

The BBC's Ed Butler looks back at the events themselves.

So that's some of the case against, the circumstantial evidence. But what about the smoking guns, the blood-stained daggers, those irrefutable prints at the scene of the crime?

Some are now emerging. The International Food Policy Research Institute in Washington, for example, has studied price movements and concluded that they couldn't all be explained by the fundamentals.

And, perhaps most damning of all, a big-time speculator is now identifying speculation as one of the causes in the movement of the price of oil.

Michael Masters is a mover of money who's based on the low-tax, high-sun island of St Croix in the Caribbean, from where he runs his company, Masters Capital Management.

He thinks he's identified the flows of money, particularly with the buying of oil. With financial markets, it's often not about buying goods for actual delivery but simply as an asset to be resold later.

First broadcast on Business Daily 8 October 2009