JayS:
The simplified version, removing the whole commodities exchange thing, is supply and demand.
I sell widgets that are produced in Buffalo NY. My competitor sells widgets that are produced in Rochester. We both sell as many as we can make and sell them for the same price because we agreed that a price war would be bad for both of us.
Tomorrow Hillary Clinton starts her diabolical takeover of the free world and enslaves Rochester. She gives my competitor the choice of death, or stop making widgets and start making “Hillary 2008” bumper stickers.
So now I still have the same quantity of widget coming out my factory door, but twice the demand. I’m still making them in Buffalo, Hillary has yet to expand her invasion, so there is nothing directly causing my price to go up. But since demand is that much higher, the price is going to go up.
Believe me I understand supply and demand.