Rogue wheat trader costs $141.5m

The Central Bank
1

I have no idea if this is the correct place to post this but are there regulations or controls anywhere anymore

2

140USD million - that’s a lot of bread! :slight_smile:

3

DOUGH!

(Sorry…)

4

I know this is slightly off topic, but to what extent is the switch from property investment share trading and the flight from the dollar into commodities by speculators driving up the cost of commodities (is there going to be a bubble in wheat prices? or is that impossible due to the nature of the asset?)

5

A guess would be that there is an awful lot of speculative dollars in the system that is not backed by fundamentals e.g.’ gold standard or manufacturing output. The holders of these dollars (maybe euro as well) are panicky and are investing in any product that is a close to the ordinary working man e.g. mortgages, oil, wheat etc. This would be based on the fact that there is too much monopoly money out there! This just shoves up the cost of living. When governments allow laissez faire economics (Ireland achieves 3rd place overall on the Economic Freedom Index), this is what happens! Yes business and profit has replaced love and caring and looking after the bulk of citizens. Yip! Mr moneyman is our new King!

6

I think you’re right - I think there is already a bubble in oil, gold and agricultural commodities. I’ve heard oil traders say (on Bloomberg) that 30% of the price is down to speculation. As it gets higher, that proportion will increase as “momentum” becomes “mania”. Unlike in the seventies there is no shortage in supply (at least according to OPEC). Considering the price is based on short-term contracts, that has to be speculation.

On agricultural commodities, there is underproduction or inefficient production in many parts of the world - set-aside in the EU, poorly automated methods in the developing world. An increase in price justifies increased production - around me, fields that have been for years been pasture and being sown. Expect to see an increase in the price of field-reared meat as pasture land is turned to cereal production. Per acre, beef in particular, but meat in general is a poor use of agricultural resources. Look at Ireland - 80% of agricultural land grows grass! (according to the famous “easy” question on the Irish “who want to be a millionaire”).

7

corny joke.