On Feb 9, 2011, at 9:13 AM, Wojtek S wrote:
> I am not an expert in this area, but your explanation blaming the
> speculators does not sound very convincing. How on earth can a narrow group
> of people manipulate the prices of products whose production and
> distribution is so decentralized. Food is not oil or credit, for chrissake.
There are real issues around food - on the supply side, climate change, and on the demand, increasing affluence in Asia - but as with a lot of things, the fundamentals have been magnified by speculation. In the case of commodities, a lot of hedge funds and such have poured tons of money into basic commodities - and some of these markets, unlike oil, are pretty thin. In more normal trading, there'd be speculative interests on both sides, but in this case, as in the 2006-7 runup, all the money was betting on higher prices.
Doug