Speculators buying contracts purely for profit — as opposed to businesses buying to hedge the cost of raw materials — have been...

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Speculators buying contracts purely for profit — as opposed to businesses buying to hedge the cost of raw materials — have been widely blamed for the surge in prices of commodities such as grains and oil. They’re even the subject of congressional hearings.

Large speculators, as defined by Yardeni Research based on data from the U.S. Commodity Futures Trading Commission, are playing a greater role in trading. But economist Ed Yardeni says they’re just responding to supply and demand, not sending prices in a new direction.

Speculative interest, and its impact, isn’t easy to pin down. The commission looks at contracts traded — a moving target — and doesn’t categorize investors much beyond “commercial” and “noncommercial.”

It said in late April that speculators aren’t necessarily to blame for surging food prices. Instead, it pointed to a weak dollar, high transportation costs and lower supply.

Of course, speculators can heighten volatility. “Sometimes they will exaggerate a move,” Yardeni says, both up and down.

For instance, wheat prices hit all-time highs in mid-March but have since dropped almost 37 percent as supply concerns eased.

But Liz Ann Sonders, chief investment strategist of Charles Schwab & Co., argues speculation is playing a role in spiking prices.

“Yes, it’s a boon for speculators, but not necessarily for farmers and certainly not for consumers,” she writes in a report. Investors are “competing with consumers and governments for dwindling food supplies.”

Investment in commodities has broadened. Assets in exchange-traded funds and mutual funds focused on the sector rose $30 billion in the first quarter to $225 billion, with half the growth due to price gains, says Barclays Capital analyst Gayle Berry.

Yardeni says speculators are good for the market. They provide liquidity, making it easier for participants to move in and out of positions.