By the Financial Times

Still in its infancy, 2011 is conjuring up memories of the start of 2008. Soaring crop prices have stoked fears of a food crisis and oil markets are bubbling.

In some parts of the world, inflationary pressure is building: once again, the commodity speculator is centre stage.

Prices for corn, soyabeans and wheat have in January returned to highs that only two years ago sparked food riots in more than 30 countries from Haiti to Bangladesh. Brent crude oil, the North Sea benchmark, hit $99 a barrel on Friday, its highest level for 27 months.

In America this week, regulators unveiled sweeping rules to keep big traders from wielding too much power over prices, amid fears that another food crisis could jeopardise global economic recovery. US senators warned of a "speculative bubble that threatens to drive up gas and food prices even further".

Many commodity prices are rising for good reasons. Physical demand is rising strongly, whether for petrol (Chinese car sales rose by a third last year) or for corn (the US ethanol industry will consume 40 per cent of the nation's crop this year).

But investors are stoking the commodities bull run with some big bets. Money flows into commodities have been huge. Barclays Capital estimates $60bn was injected into commodities in 2010. Some observers believe speculative trading has sent prices to excessively high levels, making a sharp recoil likely should the fragile economic optimism fade.

Figures from the Commodity Futures Trading Commission, the US regulator, reveal very bullish bets among money managers such as hedge funds.

In late December they owned a record net "long", or buying, position in crude oil futures and options on the New York Mercantile Exchange. In September the same types of traders held record net longs in corn.

As well as hedge funds analysing global economic trends, money managers include trend followers who use computer programs to ride market momentum and "high-frequency" traders who move in and out of positions in microseconds. Electronic traders helped send volumes last year in energy, metals and agricultural commodities at the CME, the largest US futures exchange, to a record.

Boris Shrayer, head of commodities marketing at Morgan Stanley, says: "Our business has changed. In the past there were more hedge fund participants who were fundamental or discretionary, going long or short commodities. Today there is an enormous amount of quant funds.

"Look at the correlations: copper goes up and two seconds later oil clicks up. The dollar falls, oil rallies. It's very clear there's an enormous amount of this correlation trading going on."

At the opposite end of the speculative spectrum are investors passively tracking baskets of commodities, such as the S&P GSCI or Dow Jones-UBS indices, and who trade once a month at most when they roll out of expiring futures contracts.

These investors, which include Calpers, the US's largest public pension fund, and other big institutions, are strictly buyers, often to hedge against inflation. As such, they have become targets of critics claiming they themselves push up prices.

"To me it's a bubble," says Amy Myers Jaffe of Rice University in Houston, who has studied the relationship between oil prices and speculation. "The question is: are we going to have an orderly unwind or a disorderly unwind?"

Hard evidence, though, of strong correlations between traders' positions and price movements is elusive.

In New York cotton trading managed money's bullish position has fallen by half since mid-September. Prices hit their highest level in exchange history in December. Money managers, moreover, were bearish on soyabeans as recently as July, just before a months-long rally. They quickly built a record net long position by November.

"The weight of evidence points to small marginal impacts at most on the average level of prices," says Scott Irwin, economist at the University of Illinois.

Stung by accusations it was blind to the activity of index investors, the CFTC in 2009 began publishing their overall positions. The data did not help the critics.

It showed indexers' net long position in US crude futures fell 11 per cent in the first six months of 2008, even as oil rose to $140 a barrel. Their cotton position was roughly unchanged in 2010, in spite of the surge to record prices. Even as wheat has jumped since July, the index net long position has declined.

Lawrence Eagles, head of oil research at JPMorgan, says: "When oil demand has risen by a massive 2.5m barrels a day in 2010 and supply is still being held off the market, it's very difficult to create a case that speculators are pushing oil prices higher." Oscar Bleetstein, of Credit Suisse, says: "There was a huge bubble and it collapsed. People got out and then scrambled to get back in. Now it seems like it's more back on track."

The CFTC wants to limit big speculators' holdings. Yet even some of its members doubt its proposals would affect prices.

Alberto Weisser, chief executive of Bunge, one of the world's biggest agricultural traders, is dismissive. "We don't feel we have too many speculators, and the speculators we have we don't like to call speculators. We really need people who like to be long because we need to sell our hedges."