They’re Baaack: Speculators Return to Grain Markets En Masse
by Geoff Cooper (Renewable Fuels Association) You may not have noticed, but hedge and index fund investors have quietly returned to the agricultural commodities market in droves over the past few weeks. With the stock market continuing to flounder, these speculators are positioning themselves for another bull run on agricultural commodities and crossing their fingers that corn prices go higher. They’ve laid down their bets that the drought in Russia and flood-induced crop failures in Pakistan will leave the world short of grain and spur demand and prices for U.S. grains. As clearly demonstrated by the 2008 commodities bubble, supply-demand fundamentals take a back seat to frenzied speculation when this many trigger-happy gamblers are in the market. Don’t be surprised if even the slightest hints of higher demand for U.S. crops or lower-than-expected U.S. supply touches off speculative hysterics not seen since the spring and summer 2008. If a speculative rally on corn does come to pass this fall, let’s at least hope that the pundits recognize the role of speculators and avoid immediately jumping to the conclusion—as they did in 2008—that biofuels had anything to do with it. READ MORE
Related posts:
- Food, Feed and Fuel Combine for a Modicum of Grain Price Stability
- Biofuels and Food Prices: An Update
- The Role of Demand for Biofuel in the Agricultural Commodity Price Spikes of 2007/08
- World Bank: Impact of Biofuels on Commodity Prices “Not As Large” as Originally Thought
- APOV: A Strong Case for Ethanol
