Speculation And The Increasing Cost Of Food

Imagine a market where, in addition to the usual buyers, had clients dedicated to sell and buy products without leaving the premises, with the sole aim of getting a better price in the next post and make a profit. Before the volatility of the stock exchanges around the world and the weakness of the dollar, investments in food, as with oil, is one of the most attractive alternatives for speculators. They do not intend to do with tons of rice or bananas, only their operations for the sale of certain quantities of food within a set deadline and obtaining the maximum profitability. The development of powers such as China or India ensures the rising prices in the long term, but speculation accelerates. As reflected in the price index elaborated by the United Nations Organization for agriculture and food Organization (FAO), the average increase was 36% in 2007, compared with 14 per cent in 2006 and 2% in 2005. The rise in prices of raw materials is also pressuring others companies to speculate directly on the market to compensate for losses, as it happens in the market of crude oil, attended by the airlines themselves to cover the increasing cost of fuel.

To this is added that increasingly more State investment funds bet on food. Calculations suggest that there are up to 80% of participation of investment funds in bags as the wheat. Nor refuses them the oil. Only in the London market, multiply the number of barrels that traded more than that it would be necessary to meet the needs. Some of these funds are sovereign and are intended to ensure his country’s agricultural production. An example is the State Fund of the United Arab Emirates, which is buying farms and lands in Pakistan for this purpose. It is puzzling how the FAO, at the same time that predicts record rice harvests, also says that prices will remain high. As always, the goal of eradicating hunger is threatened by a unequal distribution and not because there is not enough food.

There is the use of cereals for the production of fuels, only to meet a disproportionate demand for energy while 800 million people are malnourished. However, rich countries cry out to Heaven because ever more impoverished Nations opt for protectionist measures to safeguard its market of strong rises. Thus Viet Nam, has made it the largest exporter of rice worldwide, which has decided to limit their exports and increase production in order to guarantee domestic supply and thus keep prices under control. It would need to ask for the profit margin which ensure providers or the reason of that, even though you abarate barrel of oil on the New York futures market, not cost less the next day filling the tank, while rises Yes be traslandan immediately. Experts claim that the cheap meal before increased demand for emerging powers has ended, but do not rule out that is It can produce some adjustment in the price of raw materials. As provided that it exploits a bubble, those most affected are not precisely those who have enriched and they fled in time. In this case they will be impoverished countries forced to increase their production when prices were high and become more dependent on a single crop. Jorge Planello Periodista original author and source of the article.