http://www.bloomberg.com/apps/news?pid=20601087&sid=aDZej7GJjpjM ---------------------------------------snip Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies. Demand is rising with population and income gains in Asia, while record energy costs boost biofuels consumption, sending grain inventories to the lowest levels in two decades.
Fund-Buying Gains Index-fund investment in CBOT corn, soybeans and wheat has increased 66 percent to the equivalent of 902,105 futures contracts, a record, since January 2006, when the government began collecting the data. Each contract represents 5,000 bushels, about what Niemeyer reaps from every 22 acres of corn planted. Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago. The buying of crop futures alone is about half the combined value of the corn, soybeans and wheat grown in the U.S., the world's largest exporter of all three commodities. The U.S. Department of Agriculture valued the 2007 harvest at a record $92.5 billion. Commodities are in their seventh year of gains, with oil rising to a record $119.90 a barrel on April 22. Copper and gold reached their highest prices ever this year, and rice has more than doubled in the past year to $24.18 per 100 pounds. Crops and raw materials have ``become an asset class that institutions use to an increasing extent,'' billionaire George Soros said April 17. ``On top of that, you have specific factors that create the relative shortage of oil and, now, also food.'' Food Riots Surging food costs have sparked protests and riots in countries including Haiti, Indonesia, Mexico and Egypt. Rice, corn, soybean and wheat prices have climbed to records this year, partly because of droughts in Australia, a freeze in Kansas and increased demand for livestock feed. The divergence between CBOT futures and the underlying commodity is so great that some grain merchants have stopped bidding for new crops, said Niemeyer, a member of the National Corn Growers Association board. Others won't guarantee a price for more than 60 days. ``We have a fundamental problem with the markets,'' said Kevin McNew, president of researcher Cash Grain Bids Inc. in Bozeman, Montana, and a former Montana State University economist. ``It is very difficult to operate a grain business when the cash prices are below the futures'' by such a wide margin, he said. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
