Other banks such as Barclays got in on the act, but commodity funds remained a pretty small business – until the turn of the millennium, when two things happened. First, the US Congress rushed through a piece of legislation that permitted pension funds and others to invest in these new commodity indices.
What has happened over the past decade is that hundreds of billions of new money have been staked on food prices going one way: up.
It isn\’t fucking possible to do this in a futures or derivatives market! They are zero sum games, for everyone who goes long there must be an equal and opposite short contract.
It is only in the physical markets that the weight of money argument can hold. If someone buys wheat and stores it then yes, they can push up that physical price.
So, what we want to know is, did, as the physical price rose, stocks rise as well? Ah, no, you see they didn\’t. Physical stocks fell. So there was no hoarding, there was no price rise being created by speculation.