speculations occur in all markets, liquid, solid or gas , doesnt matter...
the most solid market, the real estate market, what could be more solid than that? And there's lots of speculation there....
same is true for the commodity market as well, many people just buy thinking that they will keep it for some time and then price goes up they'll sell.
None of this badly affects anyone in the big buildings and companies...they could maybe loose some and gain some, but nothing big.
The ones badly affected by such markets is the farmer.
Let me give you an example:
A farmer spends his entire year, works very very hard and now his crop is ready. Prices are good. But what happens is that due to bad rain, he is unable to get his crop ready by time and is maybe a week late from peak price time and has to settle for lets say 20% lower price (that also happens at times), so obviously his entire year's investment is wasted... That is very very discouraging for the farmer, he may leave this business and this could very badly effect the agriculture. In western economies, farmers are given many advantages and there's price regulations as well. We don't. Our farmers starve to their deaths because of this speculation.
Another example:
Lets assume I'm a clothe maker. Before the commodity market was introduced to a large number of people who love trading, I used to buy the cotton from various different suppliers at very stable or predictable prices. After the commodity market was introduced, prices fluctuate alot. Now obviously the clothe maker can't change its prices every single day, he'll lose customers. That gives the business man another big headache, he has keep a check on cotton market and make sure he only buys when prices are low..
The only persons who benefit from these markets are importers/exporters/short-sellers/traders/brokers etc...With this you do have more paper GDP, but actual industry is badly hurt.
The business man cant make long term decisions, he doesn't know where the market may go. The smaller businessman cant do anything, just one price drop or price rise could put him out of business. Same is true for the farmers as well.
Same is true for the other commodities....
