Bad news for the World Development Movement

You will recall that their explanation (and a rubbish explanation it was too) for the bounce in food prices 2006/8 was that lots of speculative money went into speculating on food prices.

Hmm.

According to the United Nation’s Food and Agriculture Organisation, food prices have surpassed the previous high they hit during the global commodities spike during 2007 and 2008.

If that were true of course then this current spike must also be accompanied by such a surge in speculation.

However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests, most notably in Russia. The situation was exacerbated by Vladimir Putin banning exports of wheat last summer, prompting importers in the Middle East and North Africa to hoard supplies.

Mrs Spelman highlighted how volatile current prices were, pointing out that the floods in Queensland, Australia had already had an effect on the global wheat price.

Or maybe neither spike was caused by speculation: this one by bad weather, the earlier one by the insane decision to put wheat and corn into cars rather than people: you know, biofuels?

Speculation then following the obvious noting that there will be a shortage, rather than speculation being the cause of the shortage?

3 thoughts on “Bad news for the World Development Movement”

  1. “The weakness of the US dollar, in which most food commodities are denominated, has also contributed to higher prices”

    So not so much a rise in food prices as a fall in the credibility of government paper. Julian Simon’s bet, that commodity prices would always fall, in the long or medium term, as technology improves remains the last word on this subject.

  2. The Guardian’s report has a throwaway line at the end from some chap from Capital Economics who mentions food speculation. The comments thread then has a predictable and persistent whinge from the thickos who latch onto this comment

  3. if the dollar is getting weaker ,then the price in native currencies of food should be falling…

    unless those native currencies are falling along with the dollar

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