With more and more players entering the fray, risk factor in commodity markets the world over has also gone up.
An indicator for this was evident in a recent review report of Britain's financial regulator Financial Services Authority.
In its report, FSA said new investors in commodity markets and high levels of price volatility have raised the risks of financial failure in the sector. FSA further added that it would step up monitoring in this area, where a wave of new entrants has moved into what was previously a niche market predominantly used by producers and consumers to hedge price risk.
Now a broader range of players are active in commodities, attracted by high returns and the opportunity to diversify portfolios. These include hedge funds, pension funds, high net worth individuals and some retail investors.
The FSA said in its review unlike previous cyclical bouts of investment, it expects much of this money to stay.
To show the increase in business, FSA said London Metal Exchange, which trades non-ferrous metals such as copper and nickel, has turnover of more than $4.5 trillion per year.
The regulator said aggressive and high-volume trading and ambitious investment
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