Not all fluctuations in activity can be so accurately forecast as the seasonal harvesting of a crops.No one can predict with confidence next year,s weather or the likelihood of a recession in the near future.But to the extent that speculators can from any accurate guesses today about the future scarcity of a commodity,they will tend to buy it now for future delivery,thereby causing(1)a withdrawal of present supply,(2)an increase of present price,(3)an increase in amount stored,(4)an increase in future supply,(5)a reduction in future price-or all a relative stabilization of price and consumption over time.
The reader should try to visualize the opposite process by which speculators stabilize price when they correctly foresee an exceptionally large future crop and a low future price:how they then"sell short" for future delivery,tending to depress current price,raise present consumption,and reduce curry-over of stocks.
No comments:
Post a Comment