  We consider a market model that consists of financial investors and producers
of a commodity. Producers optionally store some production for future sale and
go short on forward contracts to hedge the uncertainty of the future commodity
price. Financial investors take positions in these contracts in order to
diversify their portfolios. The spot and forward equilibrium commodity prices
are endogenously derived as the outcome of the interaction between producers
and investors. Assuming that both are utility maximizers, we first prove the
existence of an equilibrium in an abstract setting. Then, in a framework where
the consumers' demand and the exogenously priced financial market are
correlated, we provide semi-explicit expressions for the equilibrium prices and
analyze their dependence on the model parameters. The model can explain why
increased investors' participation in forward commodity markets and higher
correlation between the commodity and the stock market could result in higher
spot prices and lower forward premia.
