Reply To: Food Speculation


I’m not really familiar with the details of the arugments on either side, but I would just like to point out that what is “speculation” to one party is usually risk management to the other party. Someone who is long a futures contract for corn is speculating the price will rise, but the person who sold the contract is likely locking in profits to protect themselves from the possibility that prices might fall.

So logically, if we were to ban futures trading on agricultural commodities, that would eliminate this form of risk protection for farmers, who would now be forced to trade their crops at volatile spot prices all the time. My personal opinion is that this increase in volatility would probably do great harm to the food supply, as many farmers would more easily be forced out of business due to short-term fluctiations in prices.