Commodity investment has become increasingly popular in recent years. Clearly, the prime driver has been the spectacular rises in raw materials prices. But another factor has been the conviction that institutional investors should be diversifying away from equities and bonds, and into alternative assets.

This seems to have altered the characteristics of the market. Traditionally, futures prices have been lower than spot prices; a state known as backwardation. This is because more producers want to hedge their future output than consumers want to lock in prices many months ahead. Indeed, consumers have been willing to pay a premium to get immediate delivery.