Cnbc Commodities Biography
Others have argued for a more modest effect. For example, the World Food Organization, a division of the United Nations, concluded that freezing bio-fuel production at 2007 levels, as opposed to doubling production by 2018, would lead to 12% lower grain prices and 15% lower vegetable oil prices. [9] A similar study found that freezing at 2007 levels as opposed to reaching government mandated production levels by 2015 would lead to 14% lower corn prices. [9]
Alternative explanations for the boom in commodities prices are increased demand from middle-income countries and speculation/investment in commodities. The increased consumption demand theory holds that consumption from populous countries such as India and China drove up food prices, as consumers in those nations altered their diets to move up the food ladder towards a more western diet. [9] In reality, this was unlikely to be a primary driver of the price spike, as the World Bank noted in a 2009 report, since food demand for agricultural commodities did not change significantly during this period. [3] Similarly, supply shocks due to weather, although present, are unlikely to have been a major driver of the price boom. [9] Speculation in commodities may have played a significant role; in recent years investment managers have increasingly diversified into commodities, totaling $250 to $300 billion of holdings by mid-2008. Famed investor George Soros singled out commodities index trading, a particular method of investing or trading commodities, as being particularly destabilizing and "harmful in its economic consequences." [3] However, as with bio-fuels, the studies on the effect of financial speculation on commodities prices have been mixed.
Cnbc Commodities
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