World Development Movement report

I have now read it. Yes, they are still cretins.


2 thoughts on “World Development Movement report”

  1. It’s a somewhat more rigorous and impressive document than I was expecting. They do take on the no stocks argument – I’ve not thought about what they say yet but here it is:

    Some critics, such as those noted above, have
    argued that if price transmission occurred in this
    way then there would be a significant growth in
    inventories as commodities are held off the
    market by producers anticipating higher prices.99
    Such an argument assumes that futures prices
    only affect the expectations of food producers and not of food buyers. As food buyers also look to the futures market to inform their expectations they may also be willing to pay a higher price now to avoid paying a higher price in future. As food producers are then able to sell their food at a higher price now (as both buyer and seller have agreed at a higher price) commodities are not held off the market, but the price of the commodity has risen.100 If the impact on expectations is greater on buyers than on sellers, it would clearly be
    possible for the physical commodity price to rise
    in response to changes in the futures markets,
    while at the same time inventories are falling.101
    The short run price elasticity of supply and demand for agricultural commodities is also very low, in
    other words supply and demand do not respond
    quickly to changing prices. People need to eat
    and will be willing to give up other expenditure
    in order to maintain their levels of consumption.
    Production of food takes months or years, so
    producers cannot react quickly in response to rising
    or falling prices. Therefore only very significant and
    long lasting price changes could be expected to
    change supply and demand sufficiently to produce
    a noticeable change in actual inventories.102

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