Food price crisis, again? UN brief on derivatives speculation and resulting price volatilities

Read the recently published report: UN Briefing Note-02, part of the ‘United Nations Special Rapporteur on the  right to food’ (Olivier Schutter) It lays out evidence  for rising speculation, specifically in the market for derivatives, could lead to a price crisis in the agricultural sector, one similar to the one in 2007-08 (but a product of supply/demand imbalances) . Scroll down for a shortened list of regulatory recommendations, with regard to financial derivatives, proposed to reduce the risks of food price volatility or read summary and follow the Rapporteur updates here.

1. Given the numerous linkages between agriculture, oil, and other financial markets demonstrated above, comprehensive reform of all derivatives trading is necessary(.)
2.Regulatory bodies should carefully study and acquire expertise in commodity markets, instead of regulating commodity derivatives and financial derivatives as if they were the same class of assets(.)
3.Access to commodities futures markets should be restricted as far as possible to qualified and knowledgeable investors(.)
4.Spot markets should be strengthened in order to reduce the uncertainty about future prices that creates the need for speculation (..)
5.Physical grain reserves should be established for the purpose of countering extreme fluctuations in food price, managing risk in agricultural derivatives contracts, and discouraging excess speculation, as well as meeting emergency needs (.)

2 Responses to “Food price crisis, again? UN brief on derivatives speculation and resulting price volatilities”

  1. 1 UN Jobs October 1, 2010 at 14:01

    great article very informative

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