Field Guides to Food

Steve Suppan, all video, Financialization, Food Pricing, and Speculation

In a 2012 talk to the Agrifood Collaborative at the University of Minnesota, Steve Suppan (of the Institute for Agriculture and Trade Policy) outlines some of the U.S. and Group of 20 regulatory initiatives to prevent price distortion and market disruptions caused by excessive speculation. He discusses commodity index funds, which bundle agricultural and non-agricultural commodity contracts into an investment instrument whose unregulated “weight of money” has driven agricultural prices, since agricultural contracts are the often smallest component of the funds. Dark market trading of index funds, accelerated by High Frequency Trading strategies, has made prices more volatile and price risk management tools less effective, particularly for developing country importers. (November 24, 2012)

1. (0:00) Preliminary Remarks 

2. (6:09) Steve Suppan takes the floor  (0m 0s in the edited version)
Introduction to the topic (7:06) (0m 51s)
Overview of the talk (9:16) (3m 24s)

3. (14:53) Overview of terms (8m 27s)
Most farmers don’t play the market (15:08) (8m 43s)
Forward contracting (16:13) (9m 49s)
Index speculators (18:23) (11m 40s)
The problem with all of this (20:24) (13m 59s)
Position limits (21:43) (15m 16s)
The Bush Administration (22:27) (16m 2s)

4. (23:10) Financialization of commodity markets
The frightening implications (28:20)
The rise of the index speculator (31:53)
“Can I just stop you for a second?” (35:12)
The cycle of index speculation (36:58) (16m 45s)
A global look at the situation (43:19) (18m 24s)
“A pathetic anecdote” (44:59)
The UNICEF Family Household Survey (46:06)
Dodd Frank and the CFTC rules (46:43) (20m 3s)
“Can you give us an idea of what the rule limits are?” (49:19) (22m 30s)
Exemptions on position limits (51:56) (25m 19s)
“Could you describe derivatives?” (55:34) (26m 40s)
“Is there any legitimate use of OTC then?” (57:32) (27m 44s)
The objective of the position limits (59:20)
“The food bubble” (1:01:46)

5. (1:03:10) The G-20 recommendations on OTC derivatives (30m 49s) 
Challenges to US-EU regulatory cooperation (1:07:28) (32m 07s)
Emergency loan programs, by the numbers (1:09:39) (34 25s)
The shadow banking system (1:11:25) (36m 3s)
Agricultural products update (1:12:14)

6. (1:13:24) The forces for business as usual (36m 53s)
Institute for International Finance (1:13:27) (36m 58s)
International Swaps and Derivatives Association (1:13:48) (37m 10s)
Commodity futures exchanges (1:14:17) (37m 37s)
US Chamber of Commerce (1:14:20) (37m 42s)
US politicians on both sides of the aisle (1:14:26) (37m 48s)

7. (1:15:14) Forces for fair, transparent and orderly markets (38m 34s)
Commodity Futures Trading Commission (1:15:19) (38m 40s)
Commodity Markets Oversight Coalition (1:15:26) (38m 48s)
Americans for Financial Reform (1:15:30) (38m 50s)
Rep. Collin Peterson (D-MN) (1:15:45) (39m 6s)
Better Markets Inc. (1:16:25) (39m 40s)
Professor Michael Greenberger (1:16:40) (40m 3s)
UN Conference on Trade and Development – Globalization Unit (1:17:11) (40m 33s)
SOMO and WEED (1:17:24) (40m 48s in the edited version)

8. (1:18:05) Can you explain the shadow banking system?

9. (1:19:05) “These people are such con artists”
The regulators’ plan (1:20:12)

10. (1:22:45) The connection between commodities and global food security (41m 11s)
Excessive import dependence (1:23:06) (41m 14s)
The World Bank (1:24:01) (41m 58s)
Loss of knowledge (1:24:25) (42m 28s)
The Deputy Director of Knowledge (1:24:58) (42m 55s)
A real fight (1:25:20) (43m 16s)

11. (1:25:50) The European situation
“Our agricultural futures markets aren’t very important” (1:26:17)
What changed (1:26:30)
“It is perfectly legal” (1:27:21)
The biggest problem (1:27:39)

12. Paulson’s dissolution of the wall (1:28:33)
A controversial decision (1:28:43)

13. Why didn’t the administration intervene? (1:29:19) (41m 11s)
Political problems (1:29:27) (43m 48s)
Poor decision-making (1:29:55) (44m 18s)
The Harvard-Chicago University complex (1:30:23) (44m 46s)

14. Other possible regulatory measures (1:31:36) (45m 54s)

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