On 2/18/08, Eugene Coyle <[EMAIL PROTECTED]> wrote: > Having acknowledged that, I would add that actual agricultural > commodity costs are not the most important component of what we call > "food" prices at the supermarket.
Two points, though. One is that the demand for the basic food commodities is going to be relatively inelastic compared to that for those other components of supermarket prices. The second has to do with the volatility of prices and the lead time required for supply to respond to changes in price. Normally, the credit system and futures market would have an important role to play in managing the financial risks associated with such rapid increases in prices. How insulated are the credit markets for agricultural commodities from the credit crunch and sub-prime mortgage crisis? What inroads has securitization made into ag. commodity derivatives markets? Is there water sloshing around in this bathtub? -- Sandwichman
