We study how commodity financialization affects information transmission and aggre-
gation in a commodity futures market. The trading of financial traders injects both
fundamental information and unrelated noise into the futures price. Thus, price in-
formativeness in the futures market can either increase or decrease with commodity
financialization. When the price-informativeness e¤ect is negative, the futures price
bias can increase with the population size of financial traders. Commodity financial-
ization generally improves market liquidity in the futures market and strengthens the
comovement between the futures market and the equity market. We and that operat-
ing profits and producer welfare move in opposite directions in response to commodity
financialization, which provides important guidance for interpreting related empirical
and policy studies.