[lbo-talk] Once again, food prices

[Andy]

On Wed, Feb 9, 2011 at 9:41 AM, Doug Henwood <dhenwood at panix.com> wrote:
>
> 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.

Isn't it hard to have speculation in a slack market?

-- 
Andy