Monday, April 21, 2008

Farmers are losing too-

  A couple of commenters have noted that futures markets benefit farmers- which, I think, when only farmers and actual food industry people are in the market MAY be true-

But it's NOT TRUE NOW - USA farmers who hedged their sales by selling futures are finding - they're losing money on it.  

WHY?  You'll be astonished to learn that "experts are puzzled" - at the huge volatility in the current markets.

Gosh; do you think dumping $30 billion in outside hedge fund cash into a market could make prices go up- and make it susceptible to manipulation?  Ya think?

And who pays?  Always the little guys on the bottom- farmers- and people who eat.

More, on action, tomorrow.  Huge thanks to all who've reacted- stay furious, this iceberg isn't moving yet; but we've got a bunch of folks pushing on it now who weren't a couple days ago.

4 comments:

Nettle said...

Hi Greenpa,
I don't know if you saw this yet -

http://online.wsj.com/article/SB120882651585733337.html

""When you get a huge influx of speculative money, as happened in December and January, the price inflates beyond what the fundamentals would dictate and creates a sort of balloon," Daren Coppock, chief executive of the National Association of Wheat Growers, said in an interview. "The rules of the game need to be changed to make the market function better."

Higher grain prices and increased volatility have also made it difficult for some farmers to sell their future crops more than a few months in advance, as grain elevators refuse to buy a farmer's crop unless the farmer can deliver the physical grains within as few as 30 days. That has crimped their ability to lock in gains and manage other price risks such as the escalating costs of land and fertilizer."

It doesn't sound like anyone is going to DO anything about this yet, but there are people complaining very, very loudly. It's a start.

Leila said...

It seems to me that the reason these "speculators" are dumping money into commodities has more to do with the falling dollar and less with greedily wanting to starve half the world. Since the dollar is declining, investors are moving money into things that hold value regardless of the dollar, such as commodities and oil. As a result commodities and oil are trading higher than ever. But I think the solution is not to outlaw trading in these areas, but rather to stabilize the dollar. I don't know why stabilizing the dollar is not a priority with the administration.

the texan said...

+1 what leila said.

Dana Seilhan said...

-1 what leila said. I think we need to do both.