UN agency predicts global food crisis as prices soar (Commodity bubble)

[Hannah Bell]

A United Nations Food and Agriculture Organisation (FAO) report published this month warns that food price increases are “dangerously close” to crisis level. The bill for global imports of food may exceed $1 trillion this year. This level of food costs was last reached in 2008 when prices peaked mainly as a result of speculation and led to riots in different parts of the world.

The FAO’s measure of food prices, the broad global index, is now at 197 points, very close to the peak of just over 200, increasing by 5 percent in the last month alone.

Stocks of some staple crops are set to fall―stocks of barley will shrink by 35 percent, maize by 12 percent and wheat by 10 percent, according to FAO estimates. The US Federal Reserve Board's deliberate policy of devaluing the dollar is also boosting prices, as most commodities, including food, are priced in dollars.

The recently announced round of quantitative easing (QE) by the US will only exacerbate this. A Guardian article November 6, “US under fire for fuelling surge in food prices”, explained “the $600bn of QE announced by the Federal Reserve would hurt consumers by pushing up prices of soy, wheat and other staple foods … Commodities are considered a safe haven when the dollar is falling. There is also an incentive for producers to seek higher prices to offset the falling value of the dollar.”

http://www.wsws.org/articles/2010/nov2010/food-n27.shtml

Food Commodity Speculation Seen As Driving Up Prices; EU to Consider Regulating Market

EINNEWS, November 17---Recent near doubling of wheat prices has given new impetus for a potential crackdown by the European Union on commodity speculation.

In a speech in Brussels, the EU's financial services commissioner, Michael Barnier, said commodity speculation "can only lead to further disasters." He said he would seek to limit "risk exposures" derived from "agricultural products."

U.S. regulates commodity futures markets, the EU relies on voluntary self-regulation. In recent years bankers and financial institutions have essentially turned commodity futures trading into a gambling casino, much like the one in home mortgages that has resulted in financial devastation in most countries.

The U.S. recently enacted legislation that caps the amount of commodities futures contracts financial institutions can hold. Regulators still need to adopt rules for enforcing the new provisions and are under heavy pressure from the financial industry to go lightly on its terms.

Wheat prices spiked during the summer after fires in Russia and other natural events lowered forecasts for wheat crops. But on August 4 the Financial Times reported that the price increases also may have been driven by financial manipulation.

The Financial Times reported that Glencore, the largest global commodities trader, had asked the Russians to ban exports, which they did the following day. The ban enabled Glencore and other traders to "re-price" their relatively lower-price forward and futures contracts. Glencore and other traders operate under the protection of Swiss banking secrecy laws, so there is little transparency in their actions.

http://www.pr-inside.com/food-commodity-speculation-seen-as-r2257149.htm

[Catherina]

1. Jump

In recent years bankers and financial institutions have essentially turned commodity futures trading into a gambling casino, much like the one in home mortgages that has resulted in financial devastation in most countries.

[safeinOhio]

2. Just another bitch slap

from the invisible hand.

[SpiralHawk]

3. Plant seeds

In your yard, your community garden, wherever.

Save seeds. Plant seeds.

RepubliCorp is on the move. Speculation is one of their weapons of choice.