Price speculation impacting food supplies

The Guardian has a story in which head of the International Food Policy Research Institute (IFPRI), Joachim von Braun, says tighter regulation is needed to ensure speculators don’t cause an artificial demand in global food markets.

He says if regulation is not tightened, prices would increase excessively and the risk of malnutrition would increase.

He was one of the first to predict the sharp rise in food prices, which has seen protests in Italy, Mexico and India, as well as the number of starving people rise from about 800 million to more than 1 billion:

The world food market is still “seriously exposed” to speculators artificially driving up prices and worsening the risks of malnutrition, according to one of the world’s leading agricultural researchers.

Linking the recent food and financial crises, Joachim von Braun, the head of the International Food Policy Research Institute (IFPRI), warned that the world was at risk of a new panic over grain unless commodity markets were more tightly regulated and production expanded.

“The banking sector is in the process of being re-regulated worldwide, but the food market remains seriously exposed to short-term flows of indexed funds into commodity exchanges. That vulnerability needs to be addressed,” he said in an interview with the Guardian. READ MORE.

CFTC hopeful of new regulation by late October

A follow up story by Reuters about the Commodity Futures Trading Commission’s process and plans for regulating excessive speculation in the commodity market.

For those who have not been following this story, the CFTC’s moves are part of the Obama administration’s plans to tighten U.S. financial regulation and prevent another banking and market crisis.  Critics have  argued the global financial meltdown over the past several months was caused by laxity in the financial markets:

The Commodity Futures Trading Commission will move aggressively to rein in excessive speculation in energy and commodity markets by focusing on expanding its existing authority and could have new regulations in place by late October.

Bart Chilton, one of five commissioners at the CFTC, said he could not predict what the agency will do, but he would like to see the proposed rules issued in September, then implemented by late October or November after a period of public comment. READ HERE

As a keen supporter of tighter regulation on the commodity exchnge,  Commodify Me! will be following the develpoments of this story with great interest and will be providing comment once details of the CFTC’s plans are a little clearer.