Vienna University of Economics & B.A. Department of Economics Working Paper Series 1 HANDEL AUF TERMINKONTRAKTMÄRKTEN Maria Stückler Working Paper No. 80 July 2002 Abstract Commodity prices are significantly more volatile than prices of industrial products. This extreme price instability establishes a need for futures markets in commodities. The main functions of futures trading being hedging against, and speculation on price fluctuations; and it is hedging, that determines the role of speculation. Keywords: commodity price instability; futures markets; futures prices; marking to markets; arbitrage-hedging; hedging; speculation; normal backwardation. JEL-Code: Q00 Adress of the author: Vienna University of Economics & B.A. Augasse 2 - 6, 1090 Vienna, Austria ______________________ *The author acknowledges helpful comments from Dr. Hubert Verhonig and Dr. Norbert Hentschel.