Commodity Exchanges, Concepts, Tools and Guidelines.

• Date: 01 September 2023
• Author: Linn, Scott C.

Commodity Exchanges, Concepts, Tools and Guidelines, by Issouf Soumare (Edward Elgar, 2022). 307 pages, ISBN: 978 1 8088 (cased). ISBN: 978 1 8088 (eBook).

In a recent report, staff of the World Bank Group make the important observation: "Commodity markets are integral to the global economy. Understanding what drives developments of these markets is critical to the design of policy frameworks that facilitate the economic objectives of sustainable growth, inflation stability, poverty reduction, food security, and the mitigation of climate change." (Baffes and Nagle, 2022, pg. 1). Commodities of all stripes and flavors serve our needs every single day either directly or indirectly, indeed they are crucial to our very existence. The focus of the author is that the efficient organization and functioning of markets in which commodities and contracts involving commodities are traded is essential to the achievement of optimal public welfare. I happen to agree with this perspective. (1) Professor Soumare provides the reader with an introduction to the present state of commodity market organization around the world. Importantly, the author is careful to distinguish between markets for agricultural commodities, metals, and energies, and likewise between renewable and non-renewable commodities. The author poses that the content of the book will be of interest to a wide audience, including commodity market participants as well as policy makers. Interspersed throughout the text are brief "case" examples related to different trading venues around the world.

The book is organized in four parts.

Part I (Chapters 1-3) describes what a commodity is and gives three broad classifications: agricultural commodities, metals, and energies. There is a brief review of spot, forward and futures markets (Ch. 1), with a further breakdown between renewables (Ch. 2) and non-renewables (Ch. 3). The author chooses to classify agricultural commodities as renewable, but interestingly, while classifying energies (oil, natural gas and coal) and metals as non-renewable, also chooses to include power (electricity) in his chapter on non-renewables. This may be because he includes nuclear generated electricity in his discussion, but other sources of power generation generally thought of as "renewable" sources are also included. Chapters 2 provides a brief review of production, processing and transportation of agricultural commodities. Chapter 3 provides a discussion of oil...