Life can be lived at a remove. You trade in futures, and then you trade in derivatives of futures. Banks make more money trading derivatives than they do trading actual commodities.
Consumer groups fought hard to provide investor protections for 'special entities' such as pension funds, schools, and municipalities who purchase swaps. No comparable protection exists in the futures market.
You can no longer buy commodities at Merrill Lynch. My guess is many analysts and even executives are too young to know how profitable a hot commodities market can be. They will soon.
How many soaps does P&G make? In a sense, they're all the same. Can you tell me the difference between trading soybeans, cotton and rubber? They're all soaps to us.
A futures contract is a derivative, but the futures exchange doesn't call them 'derivatives,' they call them 'futures.'
Some hedge fund managers have made big bucks trading oil futures - George Soros is one.
Oil futures were originally created to give heating oil dealers, gas retailers, aviation companies and other businesses a method of hedging against adverse price changes. Instead, they've become just another Wall Street plaything.
I'm a futures man.
Today, there are also buyers and sellers of all these energy commodities, just like there are buyers and sellers of food commodities and many other commodities.
