“The framework to regulate agricultural commodities must be implemented at the global level”

In an interview given to the EasyBourse website on August 26, 2010, Nicolas Fragneau, a global commodity advisor with Amundi––the asset management group formed by combining the expertise of the Crédit Agricole and Société Générale banks––said it was urgent to set up a global mechanism to regulate agricultural commodities in financial markets.

In fact, the manager indicates that regulation must apply to all commodities. “The issue concerns all commodities […] There is a genuine willingness to try to regulate”. And when asked about his thoughts on the current debates in France and in the U.S., the analyst answers that “a framework must be implemented at the global level. Limiting the number of contracts to be held must be done at the international level.” These affirmations are thus confirming the need for a regulation system enforceable to all commodities worldwide; otherwise it would not be effective.

Nicolas Fragneau’s statements were made in response to the wheat crisis that destabilized a segment of the global economy this summer. Confronted with unprecedented drought, Russia’s wheat production severely withered. The consequences? A sharp increase in wheat prices––that was as swift as it was unexpected––and Russia’s decision to ban exports, while at the same time creating havoc in global markets.

This position shows that mindsets are starting to shift and that it is imperative to proceed further in the study and implementation of common governance principles for the financialized commodity markets, especially for agricultural commodities.