A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Speculation on commodity markets:
what impact on price volatility?

3 October 2011



"Financial speculators dominate the market for agricultural raw commodities": a conclusion established in a recent report by the British NGO, World Development Movement (WDM). Financial speculators now represent 60% of the participants on agricultural markets, compared to only 12% a decade ago.

According to WDM, market deregulation over the past twenty years is one of the factors behind this increase. The liberalization of agricultural markets has indeed been accompanied by an increased financialisation of markets, with transactions increasingly taking place on OTC markets. Today, it is estimated that 80 to 90% of transactions on agricultural futures markets are held on these unregulated markets. In early 2008, over 90% of positions on these markets did not involve physical trading. According to WDM, the increase of financial speculators on agricultural markets has led to the increase and greater volatility of food prices.

The amplification of price volatility is undeniably a result of speculation. However, price volatility should not be attributed to speculators alone. It is primarily caused by the intrinsic aspect of agricultural markets, which are characterised by little elasticity in demand, unpredictable natural hazards as well as by the rather irrational expectations of producers. The volatility of agricultural prices is structural and is exacerbated by the unregulated liberalization of international agricultural trade and the gradual financialisation of markets.

The regulation of agricultural markets is an incontrovertible objective. Global, transversal measures must be initiated at an international level, both on physical and financial markets. However, this assumes that the various causes of price instability and the various transmission channels that unite these causes have been identified, and today, agricultural experts are far from consensus on this issue.

Page Header
Paris, 24 April 2019