Menu Close

Speculation by Commodity Index Funds

Unlock the truth about the role of financial investment in commodity futures markets with Speculation by Commodity Index Funds

Dive into the evidence-based research that challenges the popular notion of financial speculation driving global food and energy prices.  

Uncover the Facts

This book uncovers the factual evidence about the impact of index investment on commodity futures prices.  

Investigate Concerns

Many have raised concerns about speculative participants causing price bubbles. This book delves into those concerns and offers an in-depth analysis of the subsequent regulatory proposals that resulted from them.  

Gain Clarity

Explore the rigorous testing of hypotheses surrounding the impact of financial speculation in food and energy commodity markets. This book provides a comprehensive evaluation of the relationship between financial investment and food and energy prices, revealing true causal relationships and debunking spurious evidence.  

Fifteen Years of Research

The research presented in this book spans fifteen years, making it an invaluable resource for anyone interested in understanding how commodity futures markets work.  

The most convincing evidence available on the financialization of commodity futures markets can be at your fingertips. Purchase your copy of Speculation by Commodity Index Funds today! 

“If you study, invest in, or regulate commodity futures markets, this book is essential reading.
– Jeff Dorfman, University of Georgia

Speculation by Commodity Index Funds can be purchased at the following sites:

CABI: color hardcover and individual chapters

Amazon: color hardcover and ebook

Click here to recommend Speculation by Commodity Index Funds to your local librarian!

Read More:



Tired of the confusion and endless debates surrounding speculation in commodity markets?

Are you a scholar, researcher, journalist, or policymaker who is seeking to gain clarity and evidence-based insights?

Speculation-related topics are often shrouded in complexity, leaving scholars and researchers frustrated, journalists struggling to report accurately, and policymakers craving reliable references.

The backlash against speculation casts an ever-present shadow, impacting global commodity prices, market stability, and the lives of millions. The lack of concrete evidence and conflicting opinions only exacerbate the problem.   In Speculation by Commodity Index Funds, acclaimed experts Scott Irwin and Dwight Sanders bring together over a decade of meticulous research, providing unparalleled insights into the financialization of commodity futures markets. Gain a clear understanding of the debate about the role of financial investment and unravel the myths surrounding speculation’s impact on food and energy price volatility.  

Back Cover Blurb:

Commodity futures prices exploded in 2007-2008 and concerns about a new type of speculative participant in commodity futures markets began to emerge. The main argument was that unprecedented buying pressure from new “commodity index” investors created massive bubbles that resulted in prices substantially exceeding fundamental value. At the time, it was not uncommon to link concerns about speculation and high prices to world hunger, food crises, and civil unrest. Naturally, this outcry resulted in numerous regulatory proposals to restrict speculation in commodity futures markets.   At the core, these assertions raised major economic questions about the efficiency of price discovery in commodity futures markets. Moreover, these so-called remedies did not come without a potential cost. Burdensome regulations would increase compliance and risk sharing costs across the global food system, lowering prices for producers and increasing costs to consumers.   This book presents important research on the impact of index investment on commodity futures prices that the authors conducted over the last fifteen years. The eleven articles presented in the book follow the timeline of our involvement in the world-wide debate about index funds as it evolved after 2007. We also include an introductory chapter, new author forewords for each article chapter, and a lessons learned chapter to round out the book. Policymakers, researchers, and market participants will find the book not only functions as useful documentation of the debate; but, also as a natural starting point when high commodity prices inevitably create the next speculation backlash.    

No more speculating about speculation.

Equip yourself with compelling evidence, rigorous analysis, and thought-provoking findings.

This book is the ultimate resource for scholars, researchers, journalists, policy-makers, and financial firms craving clarity in the world of commodity markets.


““Speculation by Commodity Index Funds; The Impact on Food and Energy Prices” reveals how leaders in empirical finance and in international commodity policy analysis led industry participants, investors and academics and governments astray early in the twenty-first century. Highly cited analyses by leaders in empirical finance and global commodity policy touted in turn the benefits of commodity index investing, the evils of “financialization” of the markets and the role of speculative “bubbles” in commodity price turmoil. A reader will search the top finance journals in vain for a clear exposition of how leading academics got each of these issues so wrong. But it is all laid out in the sequence of eleven papers in this book. Each preceded by a truly delightful retrospective foreword which young academics will find highly informative about the importance, and the challenges, of publishing unfashionable economic truths.”

—Brian Wright, Distinguished Professor, Department of Agricultural and Resource Economics, University of California-Berkeley

“Many observers and policy makers are convinced that participation in commodity markets by speculators and financial investors contributed to the volatility in commodity prices over the last two decades.  Irwin and Sanders have been at the forefront of careful academic investigation of the evidence that could support this conclusion.  The studies in this book use data on the positions of index fund traders in commodity futures markets, roll yields and rollover effects, and order-flow costs together with the economic theory and practical understanding of how futures markets function.  This evidence is must reading for anyone who has concluded that we need to tighten limits on participation in these markets.”

—James Hamilton, Robert F. Engle Professor of Economics, University of California at San Diego

“When food prices began spiking around the world in late 2007 – and multiple times since then – observers offered a range of competing explanations.  One popular explanation was the ‘financialization’ of agricultural commodity markets.  The idea that financial speculators were diversifying from more traditional financial securities into commodity futures, including through new commodity index fund structures, and that this innovation was enriching a few while immiserating millions captured popular and policymakers’ imaginations.  The correlational evidence indeed seemed consistent with that hypothesis.  Two experts in agricultural finance, Scott Irwin and Dwight Sanders, took those concerns seriously.  Using the best available theory, methods and data they rigorously tested a range of hypotheses around the central claim: financial speculation increasingly drives food prices globally.  Their findings are the most convincing evidence available on the topic, largely showing the correlation is largely spurious, not causal.  Food price spikes do not seem attributes to financial markets.  This book pulls together various papers they wrote on the topic into a coherent, compelling narrative.  It is a must read for anyone interested in this topic at a serious level.”

—Chris Barrett, Stephen B. and Janice G. Ashley Professor of Applied Economics and Management, Cornell University


Who is this book for?

The target audience for this book includes:  i) scholars and researchers who focus on futures markets, commodity prices, and speculation, especially those who seek in-depth knowledge and analysis; ii) journalists who aim to enhance their understanding of markets and speculation, enabling them to report accurately and effectively; iii) policymakers and their staff who require comprehensive references to support their decision-making on speculation-related matters; and iv) financial firms that are deeply involved in offering commodity products to investors, seeking insights and research to inform their strategies and operations.

How can your book help readers better understand the structure and characteristics of commodity futures markets and their participants?

In order the analyze the impact of commodity index trading in futures markets, one has to understand all the other major players in these markets and their motivations. This is why we spend so much time in the research presented in the book on the different kinds of traders and the available data on their positions in commodity futures markets.

How do you address the concerns surrounding the financialization of commodity futures markets?

From the outset, we took seriously the concerns about financial index traders in commodity futures markets because these were new players taking very large positions. If the concerns were found to be true, this would raise profound questions about the fundamental functions of commodity futures markets. Readers of the book will gain a detailed understanding of the nature of “financialization” and the different empirical approaches used to try and detect its impact in the markets.

What do you think are the future prospects and trends for commodity futures markets in light of your research?

Our research convincingly demonstrates that the market impact of financial index speculation has been surprisingly small to date. This speaks to the tremendous capacity of these important markets to adjust to major structural changes and continue to provide valuable price discovery and risk-shifting services.

How has does your research contribute to our understanding of food and energy price volatility?

Our research provides important evidence that speculators in commodity futures markets should not be the first place that one looks when trying to understand food and energy price volatility. Instead, one should seek to understand the underlying supply and demand drivers of price volatility.


Speculation by Commodity Index Funds is a must-read for anyone who wants to navigate complex commodity markets confidently and make strategic investment decisions.

Want to stay ahead of the curve and increase your chances of succeeding in commodity markets?

Sign up for Scott’s mailing list to receive notifications of when he releases new research. Scott uses the email list to alert people about new papers, latest farmdoc daily articles, presentations, podcasts, or anything else he thinks is really interesting. He promises to never spam your inbox or share your personal information. The link to sign up for email updates is found below:


Scott H. Irwin

Scott Irwin holds the Laurence J. Norton Chair of Agricultural Marketing in the Department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign. He earned a B.S. in agricultural business from Iowa State University and both an M.S. and a Ph.D. in agricultural economics from Purdue University.

Scott is a global thought leader in the field of agricultural economics. His research on commodity markets is widely cited by other academic researchers and is in high demand among farmers, market analysts, traders, and policymakers. He is regularly interviewed by leading media outlets such as The Wall Street Journal, New York Times, Washington Post, Financial Times, Bloomberg, National Public Radio, Farm Journal, and Successful Farming.

Scott has published hundreds of scholarly articles and is best known for his work on commodity speculation and biofuels. He has also written articles and op-eds for the The New York Times, Washington Times, and Time magazine. He is the most widely followed agricultural economist in the world on social media, with over 28,000 Twitter followers.

In addition to his research, Scott is a pioneer in developing agricultural extension programs that have helped hundreds of thousands of farmers in Illinois, the U.S., and throughout the world make more informed production, marketing, and financial decisions. His leadership and vision have been the driving force behind the award-winning farmdoc project at the University of Illinois since its inception in 1999. The articles on farmdoc have earned a place on the “must read” list of farmers, educators, journalists, traders, market analysts, and policy- makers around the globe. This has earned farmdoc the title of “the Wall Street Journal of ag business.”

During his career, Scott has taught a wide range of courses to hundreds of undergraduate and graduate students. This includes courses on Commodity Price Analysis, Commodity Futures and Options Markets, Introductory Statistics, Agricultural Finance, and Futures Market Research. He is regularly ranked as an outstanding teacher at the University of Illinois. In addition, he has served as academic advisor to more than forty M.S. and Ph.D. students.

Scott has received numerous awards during his career from the Agricultural and Applied Economics Association (AAEA), the leading professional association of agricultural economists in the world. He was named a Fellow in 2013, the highest honor bestowed by the Association. He has also received the Distinguished Group Extension Program Award (four times), the Quality of Research Discovery Award (two times), the Quality of Communication Award, and the Bruce Gardner Memorial Prize for Applied Policy Analysis.

Dwight R. Sanders

Dwight R. Sanders is a Professor of Agribusiness Economics at Southern Illinois University Carbondale.  He earned a B.S. in economics at Missouri State University, a M.S. in Finance and a Ph.D. in agricultural economics from the University of Illinois Urbana-Champaign.  

Dwight grew up in Southwest Missouri on a cow-calf farm.  His background in agricultural markets started with his work as a futures broker while attending undergraduate school.  Following graduate school, he worked as a commodity analyst with The Pillsbury Company in Minneapolis and then as the commodity risk manager for Darden Restaurants, Inc. in Orlando.  

Since returning to academics at Southern Illinois University Carbondale, Dwight has taught mostly undergraduate courses in the areas of price forecasting, futures markets, and agribusiness management.  His research has resulted in journal articles and other publications primarily in the areas of forecast evaluation, risk management, and commodity index funds.


“This collection of papers by Irwin and Sanders, spanning their decade plus of collaborations on commodity futures markets and the impacts of index fund investing on those markets, is greater than the sum of its parts.  The authors have included additional insights and backstories in new forewords to each of the eleven papers collected here.  These alone and worth the price of admission.  If you study, invest in, or regulate commodity futures markets, this book is essential reading.”

Jeff Dorfman, Professor of Agricultural and Applied Economics, University of Georgia

“Professors Irwin and Sanders analyze and discuss in a rigorous and clear way the role of speculation in commodity and energy markets and the impact on food and energy prices.  They show a balanced review of various – sometimes conflicting – opinions about the role of speculators in commodity futures markets.  They are not afraid to ask difficult questions: challenging the work done in this domain by others and themselves and subsequently synthesizing and improving on that work.  A book that will help better understand the structure of markets, their characteristics (volatilities) and their participants.  A timely, must-readbook for readers interested in commodity markets and the role of financial institutions.”

Joost Pennings, Professor of Finance and Marketing, and Director of the Marketing-Finance Research Lab, Maastricht University School of Business and Economics

“Irwin and Sanders’ work provides the backbone for our understanding of the impacts of index investment in commodity markets.  I view the papers collected here as essential reading for any policy maker looking to understand this issue.  Their combination of rigorous econometric analysis and clear exposition also serves as an excellent example for researchers seeking to develop an empirical agenda in any area of applied economics.”

Rob Ready, Associate Professor and Robert J. and Leona M. De Armond Research Scholar, University of Oregon

“Irwin and Sanders’ book on “Speculation by Commodity Index Funds” provides a wonderful historical record, covering their 15 years of focused research on this topic.  Irwin and Sanders’ book shows that they have ably picked up the baton from their agricultural economist predecessors: Holbook Working, Roger Gray, and Thomas Hieronymous, in carrying out empirical studies on the role of market participants in commodity price formation.  This work will guide future economists in how to objectively respond to the inevitable skepticism on commodity futures trading that has existed since the 1880s.  Importantly, the authors educate readers on allowing the data to provide answers to important policy questions, no matter where these conclusions may lead, which can variously include friction with market participants, politicians, other academics, and/or regulatory staff.  While this approach is scientific thinking at its best, it is only for the brave!”

Hilary Till, Principal, Premia Research LLC, and Co-Editor, Commodity Insights Digest (Bayes Business School)

“What has been the role of index investors in driving commodity futures prices?  And what are the effects of financialization in commodity futures markets for the economy at large?  Irwin and Sanders dive into these issues, searching for the tell-tale footprints of speculation and illuminating its role in modern commodity markets.  They offer compelling answers to these big questions which run counter to the easy solutions often peddled by politicians and the public while also providing insights into markets which collectively move trillions of dollars and help feed billions of people every year.”

David Jacks, J.Y. Pillay Professor of Social Sciences, National University of Singapore

“… the book by Scott Irwin and Dwight Sanders addresses key issues in the more than 15-year old controversy about the impact of index fund investment on commodity futures prices.  It is a must-read book for scientists, politicians, regulators and interested public needing well-founded information on the role of index funds in commodity futures markets.  The collection of articles provides an important contribution to our knowledge of the functioning of commodity markets and shows convincingly how scientific discourse contributes to the understanding the complicated way of working of financial markets. Given the heated debate on speculation by commodity index funds the reader is a backbone for fact-based discussions on the role of index fund investment.”

Martin Bohl, Professor, Westfälische Wilhelms-University Münster, Germany

“Commodity markets have experienced structural changes and unprecedented levels of activity in the past two decade.  Part of the considerable growth in the commodity derivatives open interest, and major shifts in volume dynamics, during this period are tied to financial investors’ desire for exposure to commodity prices in general and index trading in particular.  Irwin and Sanders have written some of the most cited scientific articles on whether the influx of commodity index money into futures markets has, directly or indirectly, artificially boosted commodity price levels and impacted commodity risk or liquidity premia.  This book, by presenting the authors’ own selection among their prolific output, and by spelling out their views of where each paper in the collection fits within the literature and the ongoing policy debate, is an essential read for scholars and practitioners alike.  The sharing of numerous anecdotes about the genesis and the reception of each paper is the cherry on a very tasty cake.” 

Michel Robe The Clearing Corporation Foundation Professor in Derivatives Trading, University of Illinois at Urbana-Champaign

“During the global price spikes of 2007/08 and 2010/11, Scott Irwin and Dwight Sanders were beacons of light in their detailed analyses of the role of speculation in agricultural commodity markets.  Following in a long tradition dating back to the work of Holbrook Working, Roger Gray, Tom Hieronymus, Lester Telser and others, Irwin and Sanders brought clarity to the impact of commodity index funds on commodity prices and price volatility.  This compendium of their work could not come at better time.  The war in Ukraine has sent prices to record highs and price volatility has exceeded even 2007/08 levels.  This book will be a welcome reminder to critics of futures markets to look first to market fundamentals to understand price volatility.”

Joe Glauber, Senior Research Fellow, International Food Policy Research Institute, and Former Chief Economist of the USDA

“In “Speculation by Commodity Index Funds,” Professors Irwin and Sanders delve into the controversial topic of whether financialization of commodities distorts price discover in futures markets. With the reoccurring debates about whether price spikes occur outside normal expected ranges, this book provides a compelling case for why there is not empirical proof to suggest that index investors’ positions cause large change in commodity futures prices.  Through a collection of essays, the authors make a valuable contribution to the understanding of this complex subject, providing a comprehensive and in-depth treatment of the topic, presenting evidence that index speculation was not the primary driver of the great price spikes that occurred during the 2007-2013 cycle. This book is highly recommended for academics, investors, traders, and regulators seeking a deep understanding of market dynamics.  It is a must-read for anyone interested in gaining insight into the efficiency of the price discovery process in futures markets.”

Ivo Sarjanovic, Professor of Agricultural Commodities, Torcuato Di Tella University, and Lecturer in Market Intelligence, University of Geneva