Reactions generally were positive from the wheat foods industry to a report issued last week by Senators Carl Levin of Michigan and Tom Coburn of Oklahoma blaming commodity index traders for significant wheat market disruptions. While groups were still poring over the 247-page report, the National Grain and Feed Association viewed the findings as validation of its contention that the influx of dollars from index funds into wheat markets had created problems for grain hedgers. The American Bakers Association seeks to undo exemptions from speculative limits offered to index funds by present regulations.

While the contention that index funds ought to be subjected to the same rules as speculators merits serious consideration, the issue is hardly a simple one. Several credible studies challenge the idea that index funds really did contribute significantly to the wheat market surge to record highs and accompanying volatility in 2007-08. Even more questionable is whether these funds are to blame for the lack of convergence between cash and futures prices that has been a serious issue for the Chicago wheat contract.

Perhaps the most difficult question is whether investors can or should be limited or shut out from trading in wheat and other commodity markets. Investors seeking less volatility in their portfolios increasingly are seeking assets with low or even negative correlations to the stock market. Historical data show that commodities fit the bill.

In the end, it is tough to imagine that a determined investment community will be kept from purchasing wheat and other commodities when viewed as attractive, yes even as passive, but desirable holdings.