News

June 23, 2008

The Knee Jerk Reaction By Politicians to Rising Prices Is To Turn Against Commodity Markets

By Sally White

Fear of soaring food prices is turning politicians against commodity markets not just in the US but also in Asia. Product innovation in food commodity futures has become impossible, according to India’s Multi Commodity of India exchange’s joint MD Lamon Rutten. He was speaking at the International Derivative Expo in London. Food price inflation is top priority at the Indian hustings, ahead of elections due this year and next.

Meanwhile, US markets are awaiting the results of the regulators’ investigations into how much of recent price rises across a range of commodities has been caused by speculators and index funds. Some restrictions have already been applied.

India has banned and restricted trading on the exchanges for a wide range of food commodities, from potatoes to soya oil, wheat and rice. The atmosphere was preventing the development of financial legislation that would allow funds to invest, said...