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Abstract
The first decade of the 21st century has perhaps witnessed more structural change in commodity
futures markets than all previous decades combined. Not only have trading volumes
and open interest increased markedly, but this time period also saw historic changes in both
trading and participants. The available literature indicates that the irrational and harmful
impacts of the structural changes in commodity futures markets over the last decade have
been minimal. In particular, there is little evidence that passive index investment caused
a massive bubble in commodity futures prices. There is intriguing evidence of several other
rational and beneficial impacts of the structural changes over the last decade. In particular, the
expanding market participation may have decreased risk premiums, and hence, the cost of
hedging, reduced price volatility, and better integrated commodity markets with financial
markets.