Is it speculation or is it hedging? We weren't speculating on toilet paper when it was massively out of supply early in the pandemic. Rather, there was a demand shock, and maybe a bit of a supply shock too. If TP's spot price had been meaningfully allowed to float, I have no doubt that it would have traded at 4x its long term average, even if you had factored in only consumer demand.
All that is to say I don't see compelling evidence here that speculation is the cause of the problem. I can as easily see more benign explanations.
Is there a meaningful difference between speculation and hedging - besides the intent to take delivery? People hedging with the intent to take delivery are simply speculating that the price would go up. Maybe it makes more sense to separate out along those lines instead.
Yes, I think there is. Speculation is trading activity with the intent to profit from a change in price. Hedging -- in the sense I'm talking about -- is buying an asset to guard against a change in price or shortage. You can certainly see them as similar things, and in some sense they are, but I think there would be broad agreement that this sort of hedging does not deserve the same scorn that some have for speculators.
Even if the activity is exactly the same, most people tend to feel differently about an activity because of its motivation. The motivation to obtain large profits is held in much less respect than the motivation to guard against personal shortage. Also, corporate behaviors in general get a lower prior amount of esteem than individual and household level behaviors.
We can definitely talk about whether people ought to view these things differently, but there is little question as to whether they currently do.
Speculation is about taking a risk to make a potential gain, while hedging is about reducing risk. Someone buying lumber futures as a hedge really doesn't want lumber prices to go up - it's just an insurance protection in case it does, not a way to make profit.
Whether you take delivery or not isn't exactly the point, since a speculator could take delivery of something then resell it for profit. I think some people did that for TP and masks...
Sorry, to be clear, I never claimed that speculation was nonexistent. I'm just saying that I haven't seen evidence that it was the main driver of the cost changes, outside of bare assertions.
All that is to say I don't see compelling evidence here that speculation is the cause of the problem. I can as easily see more benign explanations.