Wednesday, August 15, 2012

Banks withdraw food commodity funds

There has been considerable discussion about whether speculation drives food commodity prices up, although no definitive answer. My hunch would be that it tends to make them more volatile which creates difficulties for both producers and consumers.

Now a number of European banks are withdrawing vehicles that make it relatively easy for investors to speculate on food prices: Speculation

The decision represents a victory for campaigning groups such as Food Watch, Oxfam and the World Development Movement. The banks were concerned about reputational damage, no doubt enhanced by upward pressure on prices following the drought in the United States.

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1 Comments:

Anonymous Anonymous said...

Because speculators tend to buy when prices are low and sell when they are high, they tend to make prices less volatile.

2:27 AM  

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