Following on yesterday's "Trafigura plans to take large amounts of LME copper", I'm not saying the big trader/producer is attempting to corner the market but if they were...
First, a couple definitions from a 2012 post, "The Paradox of Profit Margins and Another Look at the Theory of Everything":
...If you're interested in the effect of hoarding on commodities prices Janet Netz, PhD did a paper I liked, "The Effect of Futures Markets and Corners on Storage and Spot Price Variability". I'll see if we have an ungated copy.
Remember, the spectrum runs from storage to hoarding to market corners.
And corners in commodities refers to physical, you can't corner a commod by simply buying futures or forwards, you also have to take up the physical supply.
Conversely, squeezes are accomplished in the futures..
A couple decent papers on this aspect of the abundance theory are:
"Large Investors, Price Manipulation, and Limits to Arbitrage: An Anatomy of Market Corners" and
"Market Manipulation, Bubbles, Corners and Short Squeezes"
The only way to combat abundance is with artificial scarcity, i.e. manipulation....
The paper from Professor Netz is here:
"The Effect of Futures Markets and Corners on Storage and Spot Price Variability".
Over the years I've mentioned the snappy little paper (12 page) with the above title, but only yesterday realized we had not linked. Time to rectify the oversight. Here's a copy via Wharton...
See, the thing is, Trafigura has lots of sources of physical copper, but instead of going to producers they went to the LME. And just to make things curioser and curioser, less than two years ago they sold an actual copper mine that they owned (we happened to catch the purchase some years earlier). Which was followed a few months later (October 2021) by "Trafigura Played Key Role in Draining LME Copper Inventories".
So here's wishing them luck if that's what they're up to because if a corner is big enough and is broken, all sorts of things can ensue.Boston Fed: In Which A Copper Speculator's Attempted Corner Causes A Stock Market Crash
