In the last ten years, the price of raw materials showed wide fluctuation and an increase in volatility. The volatility in the agricultural commodity market has aroused greatest interest because the prices of food commodities influence the survival of the people. Different studies have led different conclusions about the causes of these fluctuations. Some, following the Masters hypothesis, indicate in the increase of the speculative activity the determinant of such fluctuations. Others, instead, are critically and reported the inconsistencies of Masters hypothesis. In the following article, we analyze the wheat market, the different hypothesis of that have been proposed to explain price fluctuation and, implementing a regression analysis, we prove the uses of basis by the buyer, reseller and merchandiser of grain to achieve a profitable margin or minimize risks.
Keywords: Speculation, agricultural commodity market, regression analysis, hedg-ing.