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Commodity Speculation – Another Reason to Raise Your Own Food?

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Touch the Soil News #410

Most of the primary food commodities are traded on commodity exchanges such as the Chicago Board of Trade. Depending upon how speculators buy contracts as long positions or short bets, can influence the price of the major commodities. Yes, billions of dollars flow into these commodity exchanges to speculate on prices. A significant portion of these bets are by hedge funds or other speculative parties that do not grow food, do not buy food and do not process and manufacture food products. Yet, these speculative dollars pose two significant risks to humanity:

  1. Lower the price of a farm product below the cost of production – thus bankrupting farmers.
  2. Raise the price of basic farm products so high that tens of millions of people –unable to absorb the price hike – default to starving. Starving people present one of the greatest risks to political stability and failure of political regimes.

 

This past week, the information company – Agrimoney – revealed how commodity speculation on the unexpected recent rising of commodity prices has provided better returns than on shares or bonds. This has created a robust inflow of additional dollars into the arenas of commodity speculation. Some of the primary commodities that are speculated on include corn, soybeans, soybean oil, wheat, cattle, hogs and milk. Most farmers in America grow these products as primary or rotation crops. These crops also are the primary ingredients in a large percentage of the foods we eat. Major commodity prices are up 12 percent this year already.

The children of yesteryear (1944) show how you can sidestep food speculators to some degree.

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Financial forces that result in cycles that eliminate family farms on the speculative downswing and then create hunger on the speculative upswing generally create a world of greater food insecurity. A food garden helps you hedge your bets.

Following is a fun video clip about raising your own:

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