Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin

[marmar]

from Bloomberg:



Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin

By Jeff Wilson

April 28 (Bloomberg) -- As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street's speculation in grain markets.

Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos on March 1. The holdings jumped 29 percent in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk.

Niemeyer, who farms 2,200 acres in Auburn, Illinois, won't use futures to protect the value of the crop he will harvest in October. With corn at $5.9075 a bushel, up from $3.88 last year, he says the contracts are too costly and risky. Investors want corn so much that last month they paid 55 cents a bushel more than grain handlers, the biggest premium since 1999.

``It's the best of times for somebody speculating on grain prices, but it's not the best of times for farmers,'' said Niemeyer, 59. ``The demand for futures exceeds the demand for cash grains.''

Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies. Demand is rising with population and income gains in Asia, while record energy costs boost biofuels consumption, sending grain inventories to the lowest levels in two decades.

Fund-Buying Gains

Index-fund investment in CBOT corn, soybeans and wheat has increased 66 percent to the equivalent of 902,105 futures contracts, a record, since January 2006, when the government began collecting the data. Each contract represents 5,000 bushels, about what Niemeyer reaps from every 22 acres of corn planted.

Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago. The buying of crop futures alone is about half the combined value of the corn, soybeans and wheat grown in the U.S., the world's largest exporter of all three commodities. The U.S. Department of Agriculture valued the 2007 harvest at a record $92.5 billion. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=aDZej7GJjpjM&refer=home

[Andy823]

1. Investors caused the housing crisis

And now they are going to cause a food crisis, all because of their "GREED"!

The government, under the worst president in history, has allowed this kind of crap to keep happening. The rich get rich and the poor go hungry. We need to put a stop to this by regulating, somehow, the prices on food, energy, and the things that we need to survive. Nobody should die of hunger simply so some rich bastard can increase his wealth my millions, maybe even billions as in the case of oil profits! Bush has been giving his rich "base" everything they want while the average person has suffered.

People can barely afford to buy gas to get to work. Food prices have gone up because of high gas prices, and now because investors are trying to make more money before Bush leaves office.

A major priority of our next president, hopefully a democrat, should be to stand up to wall street, big oil, and special interest groups, and get the country back to what it was meant to be. A nation were "GREED" is not the main driving force. A nation that takes care of "ALL" the people, not just the rich!

[Hobarticus]

2. Never thought I'd agree with more market regulation, but...

...it's obvious the game is rigged. Oil, food, any commodity....

Reagan's beloved "invisible hand of the marketplace" just keeps grabbing more and more for a select few, when it's not choking the shit out of the rest of us.

Human nature cannot be trusted with the market. We are ugly and greedy, and will starve someone else for a few pieces of silver.