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The commodity market initially grew due to producers desiring a hedging vehicle. Recently institutions like pension plans and hedge funds have looked to commodities as a way to diversify and grow, respectively.
Which of the following least describes the impact this institutional money has had:- Contango has become less extensive
- Rolls have become more expensive
- Potential for bubbles has increased
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All of the above have been a part of the change in commodities except contango becoming less extensive. In fact, the opposite is true. Backwardation used to be the norm, since producers had to pay a premium in order to hedge. As investors and speculators have increased, that situation has become less prevalent.
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