The influx of investment into commodities has sparked intense debate over whether speculation has somehow caused prices to become disconnected from supply and demand fundamentals. The US Senate recently heard testimonies suggesting institutional investors and hedge funds were contributing to food and energy inflation, and commodity index-linked products were to blame for rocketing prices.

There is simply no evidence for that assertion. Energy and grain prices have risen as commodity trading volumes and outstanding amounts of derivatives have increased, but that is hardly evidence of causality.