speculation in food commodities - more speculation in futures than those held by producers & users.

[Bill USA]

There are more futures contracts for corn and wheat held by speculators than those in the business of producing and processing food (Producer, merchant, processor, user).

Corn: Producer/Merchant/Processor/Users hold 49% of the contracts. Speculators hold 51%.
Wheat: Producer/Merchant/Processor/Users hold 35% of the contracts. Speculators hold 65%.

There is no economic rationale for those not in the business of producing or processing food to be speculating on farm commodities. This makes no sense whatsoever.


http://www.cftc.gov/dea/futures/ag_sf.htm

Commitments of Traders reports page: http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

[Mnemosyne]

1. Of course it makes sense; one word - Profit. It's not their problem if the cost of

food goes sky-high and more people slowly starve. :sarcasm:

[ThomCat]

2. This bubble has been building for a while.

The next big crash is going to decimate the FOOD INDUSTRY.

The next big crash is going to destroy the nation's and the world's ability to FEED PEOPLE.

All because Wall Street has an insatiable need to inflate bubbles in order to create short term profits from their gambling addiction with derivatives. :grr:

Derivatives that the government is still legally PROHIBITED from regulating. Obama still has not implemented ANY reforms to try to regulate or police derivatives, even though we all know that this is what has created the last few bubbles, and this is what is creating Two bubbles even now. One in food commodities and one in municipal bonds.

People still have this illusion that Obama implemented regulations that fix the problems on Wall Street. The existence of two bubbles, while we still haven't even begun to recover from the collapse, is proof that nothing has been fixed.

The criminals who collapsed the economy are still in charge, still doing the same shit they did before, the same way, getting ready to do the same damage again, just in different markets this time.

• So when will derivatives finally be regulated?
  
  
• When will Wall Street finally be policed by regulators who are independent, with no conflicts of interest, instead of former/future wall street executives who have huge financial incentives to side with the wall street firms instead of with the law?
  
  
• When will the Wall Street firms truly and accurately be audited based on their real financial health, and the ones that are bankrupt be put in receivership, as should have happened from the very beginning?
  
  
• When will the Wall Street firms that are "To Big To Fail" be broken up because they are "To Big to Exist?"
  

The food we all need in order to live is at stake now. We have all see the rising prices. When those prices are up 300%, or 800%, will that be enough to make Wall Street happy with their profits and bottom line?

Will the deaths from poverty and starvation matter to anyone in government?

Will anyone on Wall Street be held accountable for Murder when hundreds of thousands or millions of people are starving?

When will we finally have a disaster so severe that government thinks it is finally time to act, and regulate Wall Street?

:(

[Nihil]

3. That is (sadly) a very accurate and totally truthful post.

:-( indeed.

[cutlassmama]

4. Everyone who can needs to grow a little garden in their yard or

in pots in their apartments. It may be the only food you can afford in a few months.

[Bill USA]

5. addendum: Derivatives and Speculation in commodities

I thought I added this in the post yesterday, but somehow it didn't 'take'..(maybe I logged off before updating)..

one of the 'innovations' that has been created in recent years are commodity index funds. Funds which invest in a number of commodities to broaden the risk and enable investors (generally large institutional investors) to invest in commodities which ordinarily they would not be able to. They invest in a basket of commodities (a collection of from 17 to 25 commodities) which dramatically reduces the risk of investing in commodities.

The other sort of demonic twist in this story is the Commodity Futures Modernization Act (CFMA)(see http://motherjones.com/politics/2008/05/foreclosure-phil">Who Wrecked the Economy? Foreclosure Phil - Mother Jones) which allows investors to speculate in commodities without being tracked by the Commodities Futures Trading Commission. (note that Phil Gramm slipped the CFMA in as a rider to the Omnibus Funding bill, which was up for a vote in the last few days of the Clinton administration. The funding bill was veto proof as it had to be passed to keep the government funded and since there were only a couple days left in the Congressional session there would have been no time to veto and rewrite the bill even if anybody knew the CFMA was in there. Virtually nobody in Congress even knew the CFMA was in the 11,000 page Omnibus Funding bill) They do this by buying Credit Default Swaps from a bank and the bank buys the commodities for the speculator. This way the CFTC can't monitor if one or a small number of speculators are monopolizing and possibly manipulating the market in certain commodities. This is written into the CFMA.

Now, note what Michael Masters, hedge fund manager had to say to a Senate Committee:

http://hsgac.senate.gov/public/_files/052008Masters.pdf

"Assets allocated to commodity index trading strategies have risen from $13 billion at the end of
2003 to $260 billion as of March 2008, and the prices of the 25 commodities that
compose these indices have risen by an average of 183% in those five years!"

Note that is a growth of dollars bet on commodities of 20 times - in five years!

and here's what Master had to say about speculation in Wheat:

"....in 2007 Americans consumed 2.22 bushels of Wheat per capita. At 1.3 billion bushels, the current Wheat futures stockpile of Index Speculators is enough to supply every American citizen with all the bread, pasta and baked goods they can eat for the next two years!"

....jeeze, you think that might affect wheat prices??


http://www.cftc.gov/ucm/groups/public/@lrrulesandstatutoryauthority/documents/file/ogchr5660.pdf">Commodity Futures Modernization Act

and on the next to the last page of the act:

http://www.cftc.gov/ucm/groups/public/@lrrulesandstatutoryauthority/documents/file/ogchr5660.pdf#page=261">SEC. 407. EXCLUSION OF COVERED SWAP AGREEMENTS.

No provision of the Commodity Exchange Act (other
than section 5b of such Act with respect to the clearing
of covered swap agreements) shall apply to and the
Commodity Futures Trading Commission shall not
exercise regulatory authority with respect to,
a covered swap agreement offered, entered into, or provided by a bank.

[Nihil]

6. Kick for a very important addition.

What a bunch of thieving, exploiting, greedy bastards ...

:grr:

[Bill USA]

8. of course, Phil Gramm would say your just one of the "nation of whiners" he says we've become,

Phil Gramm, a inveterate member of the Ghoulish Old Prostitutes.

[PamW]

7. I'm waiting for....

speculation in food commodities - more speculation in futures than those held by producers & users.
================================

I'm waiting for someone to market "Fukushima Diachi Brand Seafood"

It's the only seafood that is fried before it was caught. :)

PamW

[PA Democrat]

9. Enron's manipulation of energy prices in California was the first warning

about Phil Gramm's trojan horse bill that deregulated futures trading. A decade later and now we are seeing the same process with food commodities. What will it take to end it? Food riots here in the "richest " nation in the world? ?

[CabalPowered]

10. Been on the road for the past few weeks

And I'm not sure this has any direct correlation but only an observation after passing through several states. Out of 20+ restaurants, bagel places, pizza joints, etc.. there were at least four places that had something not available with some boiler-plate text on the menu that Sysco and Food of America must be passing along.. Reads something like this:

Due to extreme market fluctuations and disruptions in global supply chains, some items are not available and may be substituted for other food items...

[Nihil]

11. Interesting ...

Thanks for passing that along - worth keeping an eye on ...
:hi: