Do hedging and speculative pressures drive commodity prices, or the other way round?

Concerns have been raised that trading position behavior of futures market participants may have caused recent commodity price movements. This study empirically examines whether pressures on prices due to hedging and speculative activities can be identified and whether they have changed due to structural changes in commodity futures markets. It employs Toda–Yamamoto Granger-causality tests applied on a variety of measurements of hedging, speculative, and index trader position activities and futures prices in a broad range of commodity markets. Results suggest that hedging and speculative position behavior may not be helpful in explaining prices; to the contrary, prices may have predictive power for position changes.