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There is a Senate bill in the works now, called the "Stop Excessive Energy Speculation Act". Part of the act forces the CFTC to "distinguish between 'legitimate' and 'non-legitimate' traders": the legitimate being those trying to manage their risk, and the non-legitimate traders being the speculators.
The futures market was created so producers of commodities (be it oil, corn, wheat etc.) could manage their risk. If a wheat farmer was worried that wheat prices would drop, but feels current prices are acceptable, he can hedge his risk and sell his commodity at current prices. On the flip side, if General Mills was worried grain prices would increase - thereby increasing their cost of doing business - they could hedge their risk and buy the commodity at current prices (with delivery of the commodity set at a future date).
Speculators are the ones who assume the producers risk of price fluctuations, in hopes the commodity will move in the speculator's favor....
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