Tuesday, October 26, 2010

Opportunities for speculators

"However, opinions are sharply divided over whether these prices signal a world food crisis like the one in 2008 that helped cause riots in 25 countries, or simply reflect volatility in global commodity markets as countries claw their way through recession.

"A food crisis on the scale of two or three years ago is not imminent, but the underlying causes [of what happened then] are still there," said Chris Leather, Oxfam's food policy adviser.

"Prices are volatile and there is a lot of nervousness in the market. There are big differences between now and 2008. Harvests are generally better, global food stocks are better."
Longtime hedge fund manager Mike Masters, who has worked with WDM, said: "Because there is already much more capital available in the world than hard commodities, speculators can increase the price of consumable commodities, like foodstuffs or energy, much higher than traditional consumers and producers can react.

"When derivative markets are linked to commodity markets, this nearly unlimited capital from the financial sector can cause excessive price volatility."" (Thanks Laila and Rania)

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