Great article on whats going on behind the scene with speculators once again playing the same game. This has nothing to do with supply and demand, just like when oil was climbing to $150 a barrel it didn't either, it was all speculation driven just like it continues today with the prices of sugar, cotton, and the rest of the commodities that trade in the futures market. Its become nothing but a game for the greedy fucks who want to make as much as they can speculating on something that should not be speculated on since over 6 billion people rely on the importance of food. This is a sad world! Are Speculators Adding to World Hunger? CNBC.com | January 07, 2011 | 02:01 AM EST The latest big trade to profit from is agriculture. But with international food prices hitting record highs, campaigners are furious and it is adding to a regulatory zeal. "Food isnât an asset, itâs a basic human need," says the World Development Movementâs Heidi Chow. "The (futures) market was set up for farmers and food producers to hedge risks inherent in what they do. Betting on the price of food is having a catastrophic effect on the lives of millions of people in developing countries â or even those on low incomes in the U.S. and UK." But are speculators really driving prices to artificial levels? Itâs clear the amount of money invested in long-only indices for agriculture â along with energy and metals - has rocketed. But thatâs not necessarily the same thing as physical demand for these commodities. "For every long there is a short; for everyone who thinks the price is going up there is someone who thinks it is going down; and for everyone who trades with the flow of the market, there is someone trading against it," wrote Professor Tom Hieronymus. 50 years on, the current Professor of Agriculture Marketing at Illinois takes up the âzero-sumâ market argument. "A very large number of futures and derivative contracts can be created at a given price level. In theory, there is no limit," writes Professor Scott Irwin. "This is another way of saying that flows of money, no matter how large, do not necessarily affect the futures price of a commodity at a given point in time. "In order to impact the price in the cash market, index investors would have to take delivery and/or buy quantities in the cash market and hold these inventories off the market," he tells Econbrowser. But Americaâs most powerful regulators are more pragmatic. Bart Chilton is one of five voting members on the US Commodity Futures Trading Commission. He takes the 2008 spike in prices as his starting point: "$200 billion of speculative money came into the market; institutional holdings, hedge funds, pension funds. We got extraordinary high prices. But there are now more speculative positions than in 2008 â we now have the highest speculative positions in history." "Some people are arguing that we are seeing âdelinkedâ prices â prices âdelinkedâ from true demand and supply â sugar, cotton, cocoa & coffee. Iâm not an economist. I canât say what percentage is due to speculation. But itâs easy to find evidence that they are having an impact.," concludes Chilton. At the World Development Movement, Heidi Chow is campaigning for tighter regulation of any speculation in staple foods. "We want all food derivative trades to go over public and transparent exchanges, and not Over The Counter (OTC) where bankers strike private deals with no disclosure and in secret. We want position limits set so that hedge funds and investment banks canât speculate excessively," Chow says. Some of Chowâs hopes may soon be realized in the United States. Commissioner Chilton expects to push again next Thursday for his agency to vote to limit speculative positions to 10 percent. Thatâs 10 percent, regardless of whether itâs held on regulated markets or the vast pool of OTC contracts. And it's not just swaps and futures for agriculture, but energy and metals as well. The CTFC had to design new rules anyway under the Dodd-Frank financial overhaul. "Before the new law we had some authority, now we are mandated to do it. Limits will be in place. Itâs just a question of when," says Chilton. Two Republicans on the CFTC have vetoed action for fear it could damage the market. Chilton says, however, that a 10 percent limit will only really effect the biggest of the large banks. But the scale of positions that might have to be liquidated are enormous. "In September in silver we had on trader with 35 percent of the regulated market. In natural gas or crude oil one trader can hold greater than 20 percent," says Chilton. âWe regularly see a much higher percentage than will be permitted in wheat, corn, sugar. "As regulator, our job is not to come in as the Fire Service, picking over charred remains," he adds. "Our jobs is to act like Police â to prevent and deter fraud and manipulation."