Thursday, May 8, 2008

Traders Not Causing Higher Food Prices

From a story on Marketwatch.com today:


The latest report from the Commodity Futures Traders Commission about outstanding rice contracts shows that only about 19% of them are held by non-commercial investors, or companies that might be speculating as opposed to actually hedging against price moves.
He said effects such as production problems, demand increases, the increase in energy costs for producers, and even the decline in the value of the U.S. dollar have all played even bigger roles in contributing to the surge in prices. The dollar itself has contributed to about 25% of the price increases in agricultural commodities, especially in corn and wheat, he said.
"We had a bit of a perfect storm in a lot of these markets," over the past year, he said. "Commodities are very energy intensive to produce and transport."