Are the speculators hedging – or simply speculating?
It’s the same answer we gave above for owners and charterers – we have no way of knowing exactly what they are trying to accomplish on a given trade. Speculators do put on directional trades. But they also might have a trade that involves multiple positions – and the FFA trade is just one component of a much larger trade. They might also be trading forward freight agreements in conjunction with the commodities market – oil, coal, ore. You really don’t know why they are doing it.
