Don’t play with your food (futures)

How did William Pfaff get this article into the op-ed pages of the NYT?

The food crisis is a real one, with rice – basic to the diet in much of Asia – rising in price by 75% in two months, and the rise in wheat, equally important to most western countries, rising by 120% over the year. This risks famine in vulnerable countries.

Already 100 million additional people are considered by the World Bank to have been forced into extreme poverty, and there are food riots in Egypt, Haiti and elsewhere. Hence the urgency in proposals for new funds to support food aid programs.

The conventional explanations for the flare in prices are population growth, (misconceived) diversion of corn and soybeans to bio-fuel production, rising Asian and Middle Eastern demand for high-value foods, higher transport costs, and crop failures. Oddly little has been said about the role of speculation in the rise in commodity prices generally and specifically in food.

On the Chicago CME Group market, which deals in some 25 agricultural commodities – it is a merger of the former Chicago Mercantile Exchange and Chicago Board of Trade – the volume of contracts has increased by 20% since the start of the year and now has reached the level of a million contracts a day. This will soon exceed the rate of growth reached in all of 2007.

The hedge funds are now active in commodities and are playing the futures contracts, where upwards of 30 million tons of soybeans for future delivery are contracted for every day. They are also buying the companies that stock grains.

Speculative purchases have no other purpose than to make money for the speculators, who hold their contracts to drive up current prices with the intention not of selling the commodities on the real future market, but of unloading their holdings onto an artificially inflated market, at the expense of the ultimate consumer. Even the general public can now play the speculative game; most banks offer investment funds specializing in metals, oil, and more recently, food products.

It is astonishing in the present situation that the international financial institutions and government regulators have done little to control or banish this parasitical and anti-social practice. The myth of the benevolent and ultimately impartial market prevails against all contrary evidence.

Openly questioning FREE MARKET capitalism on the same pages that Thomas L Friedman and William Kristol ply their trade? Is the NYT tryin to create the earth-swallowing black hole, knowing that CERN never will?

Apparently, i misread the credits in our local newspaper. this was actually in the IHT.

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