How excessive financial investments impact agricultural derivatives markets

This report provides an overview of the on-going discussion on the impact of the financial investments in commodity derivatives markets. These investments have dramatically increased over the past decade, a period of sharp and sudden price swings in both futures and physical markets for commodities, including food commodities. Rising food prices are hurting the poorest people who spend up to 80% of their income on food. An increasing number of studies find a relationship between the increased financial speculation and price developments that are unrelated to real supply and demand. According to the precautionary principle as enshrined in the EU Lisbon Treaty public action to curb this ‘excessive speculation’ is warranted. We present policy measures to do this, with a focus on the rules currently under discussion in the European Union.

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publication cover - Feeding the Financial Hype
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