Since the beginning of our Republic, farmers and agricultural interests have accused speculators of manipulating markets and capturing the financial gains that ought to go to producers.
The lastest chapter in this long story was played out today at the Commodity Futures Trading Commission. Regulators brought together investors, ag producers and groups representing farmers to talk over recent volatility in the markets.
The investors say they're simply trying to hedge inflation risk for pension funds and other big groups. After all, people on a pension have to buy bread and beef and gas.
Groups representing farmers and bakers complain that the $175 billion poured into commodity funds in recent years has whipsawed the market adding to price swings.
The numbers are eye-popping: Rice up 123% this year, Wheat 99%, Corn 66% and Cotton 48%.
What's happening? CFTC economists say its all about demand in Asia, ethanol demand in the US, and poor crops in Australia and Canada.
Whatever it is, prepare to pay more at the grocery store.
Comments
IF WE CAN GET THE GAS PRICES TO COME DOWN TO $50 A BARREL THE ECONOMY WILL DO BETTER , IT WILL BE EASIER TO FEED THE HUNGRY RICE AND WE NEED TO STOP PAYING FARMERS NOT TO GROW CROPS, GOVERMENT STUPIDITY AT WORK HERE!!!!
John,
It's not our job to promote or demote assets. Todd is a commentator - a different ball game altogether.
I'd say, given all the hype on commodities, Todd was right to raise the question whether investors have gotten carried away here too.
Yes there is more demand for commodities, but does that mean oil will go up forever? At some point we'll really start car pooling and walking to work.
Regarding your comments on the commodities, i found it interesting that today (April 24) a guest on your station Todd Buchholz suggested that much like the technology bubble, commodities are ready to pop as they are also in a bubble.
I am astounded that Mr. Buchholz would make such a ridulous assertion. The nature of the commodities price uptrend is based upon economic principals that clearly identify that after years of low prices and underinvestment in developing mines and exploring for new reserves has led to a severe supply deficit.
As Chris Puplava asserts on his(financialsense.com) articles, metals such as zinc, tin and lead as well as silver and gold are in short supply (LME data)
Greg Wilkins, the former CEO of ABX has publically stated that we have reached Peak Gold.
Bubble indeed! I am shocked that mainstream media continues to lead the public away from real 'hard assets' that have true value back into paper based assets like debt backed Federal Reserved Notes.
I can not recall one mainstream American media outlet promoting gold or silver as a viable asset class but they stand in line to declare the end.
John Kirk
Surrey, B.C.