How Goldman Sachs Created the Food Crisis Foreign Policy (hat tip reader May S). There is one misleading factoid in the story. It creates the impression that independent traders are the ones who make the most money from monthly commodities contract rolls. Not so. The practice is called “date rape” and its leading practitioner is….Goldman.
May 012011
“With the Fed essentially spewing money it’s hard to know exactly where that money is going to go, which markets will get affected,” says Bob Gelfond, CEO at MQS Asset Management, a hedge fund based in New York. “It’s like putting on a giant fire hose. You can’t really control it that well.”
Despite any short-term gyrations, however, few are willing to declare commodities a bubble ready to pop.
Why Commodities May Be Better Bet Than Stocks Now – Jeff Cox, CNBC
Sugar and Coffee: Hard Spots in the Softs Market
- Sugar and coffee have outperformed grains, meat and dairy. Supply deficits due to cane crop failures in India and weather damage to coffee in Colombia have kept sugar and coffee prices at multi-year highs. Sugar prices in August 2009 saw record highs, not seen since March 1981, due to shortages coming from major sugar producers in India, Brazil, and China.
Aug 022009
Some view the issue from the standpoint of protecting free markets. Is constraining speculation in commodities any different than controlling investment in stocks and bonds? However, commodities are not traditional investment assets and their markets need governance that differs from that of the capital markets. We readily accept limitations in capital market transactions: prohibitions on insiders trading, for example. Commodity markets have different but equally important rules, rules meant to ensure that speculators can’t overwhelm efficient market pricing. It’s time for our regulators to enforce them.
Why Commodity Speculation Is Different – Jeff Korzenik, Financial Times
