Figure 3 - uploaded by Sean Field
Content may be subject to copyright.
Combined CFTC data on net futures contracts for CBOT Corn, 2006-2014. The pink vertical lines denote when global food prices, measured by the FAO's (2015) food price index, ''spiked.'' The first food price spike occurs in 2008 and lasts several months. The second spike occurs in 2011 and a third spike occurs in 2013. Source: CFTC (2015a, 2015b, 2015c; available at: http://www.cftc.gov/files/dea/history/fut_disagg_xls_hist_ 2006_2014.zip).

Combined CFTC data on net futures contracts for CBOT Corn, 2006-2014. The pink vertical lines denote when global food prices, measured by the FAO's (2015) food price index, ''spiked.'' The first food price spike occurs in 2008 and lasts several months. The second spike occurs in 2011 and a third spike occurs in 2013. Source: CFTC (2015a, 2015b, 2015c; available at: http://www.cftc.gov/files/dea/history/fut_disagg_xls_hist_ 2006_2014.zip).

Source publication
Article
Full-text available
The treatment of recent global food price volatility in the neoclassical academic literature is problematic in its limited conceptual and empirical scope. This study presents new empirical data and analysis linking financial speculation by index swap dealers (‘index funds’) with US and global food price volatility. Marxian circuits of capital are u...

Context in source publication

Context 1
... high position limits allow index swap dealers and hedge funds to speculatively buy and sell hundreds of thousands of commodity futures contracts, each worth as much as 5000 bushels of grain. I illustrate these unprecedentedly large speculative trades for nearby CBOT Corn contracts in Figure 3, which show the net buying and selling behavior of swap dealers, hedge funds, and actual users of grain. The figure shows that the speculative long (buying) positions of hedge funds and index funds alone is roughly equal to all corn being sold by producers and wholesalers using CBOT corn futures. ...

Similar publications

Article
Full-text available
Over the last few years, shareholder activism has gained relevance, with new players increasingly looking to get involved in corporate influence and control. Born in America in the 1980s, with corporate raiders, the act of giving a voice to shareholders has spread from the United States to Europe. The aim of this research is to map this trend in th...
Article
Full-text available
In the last decade, a few models of portfolio construction have been proposed which apply second order stochastic dominance (SSD) as a choice criterion. SSD approach requires the use of a reference distribution which acts as a benchmark. The return distribution of the computed portfolio dominates the benchmark by the SSD criterion. The benchmark di...
Article
Full-text available
Investors invest in a foreign market to reap the benefits of currency differences. The change in the value of underlying assets affects these hedged funds and, at the same time, restricts investors from higher return possible in unhedged funds. This study aims to examine the performance of most actively traded shares in Exchange Traded Fund and any...
Article
Full-text available
Hedge fund activism is becoming increasingly important in the market for corporate control. We use an event study to analyze the impact of hedge fund activism for acquiring firms, exploiting a new dataset which combines the universe of acquisitions in the presences of hedge fund activists with other financial data. Our results show that acquiring c...

Citations

... For instance, during the food price spikes observed between 2008 and 2011, hedge funds were implicated in exacerbating price volatility through speculative trading in futures markets. This financialization of food markets has had profound implications, particularly for vulnerable populations in developing regions, where food security is critically impacted by price volatility driven by financial actors (Field 2016). The interconnectedness of global financial markets means that actions taken by hedge funds can ripple through to affect local food prices, often disconnecting them from the underlying physical supply and demand conditions. ...
Article
Full-text available
This study explores the financialization of agricultural commodities, focusing on how financial derivatives and index funds impact the volatility of agro-food markets. Using a Dynamic Conditional Correlation (DCC) GARCH model, we analyze volatility spillovers among key agricultural commodities, particularly maize, and related financial assets over a sample period from 2007 to 2020. Our analysis includes major financial assets like Exchange-Traded Funds (ETFs), the S&P 500 index, and agribusiness corporations such as ADM and Bunge and the largest corn flour producer, GRUMA. The results indicate that financial speculation, especially via passive investments such as ETFs, has intensified price volatility in commodity futures, leading to a systemic risk increase within the sector. This study provides empirical evidence of increased market integration between the agro-food sector and financial markets, underscoring risks to food security and economic stability. We conclude with recommendations for regulatory actions to mitigate systemic risks posed by the growing financial influence in agricultural markets.
... Since the financial crisis of 2008, speculation has become a primary reason for the frequent spikes in food prices since the turn of the century (Bredin et al. 2021). Meanwhile, agricultural transnational corporations and capital from developed countries are increasingly concentrated in the global food and agriculture system, leading to developing countries becoming more reliant on imports and more susceptible to the impact of food price shocks (Anderson 2014;Field et al. 2016). Developing countries' agricultural financial markets lag behind, with weaker resilience to risk (Ivanic et al. 2012), making the negative impact of commodity futures speculation on their food security more significant (Sosoo et al. 2021). ...
... Simpson (2019), Labban (2008), and other authors highlight what storage does. They emphasise the temporal-spatial dimensions of storage facilities, the vital role that storage plays in facilitating the circulation of capital, how storage preserves the value of commodities from one time period to another, and how futures markets allow storage to be speculated on and hedged (Field 2016;Working 1949Working , 1953. Applying the West African lens of "spirited matter" to the ethnographic exploration of US residential storage, by contrast, Sasha Newell (2014Newell ( , 2018 unsettles functionalist notions of storage to reveal how items being stored can carry moral weight, be entangled with notions of personhood and memory, and be the fountainhead of imaginative possibilities. ...
Article
Full-text available
Drawing on ethnographic field research that I conducted in Houston, Texas since late 2018, I explore subterranean storage arrangements utilised by the US hydrocarbon industry. I argue that storage is vital not only to its pluri‐temporal strategies but to the outward projection of good governance. Natural gas, I show, has evolved from excess nuisance, to liability, to potential asset turned commodity in ways that parallel unfolding understandings and treatments of carbon dioxide. Governance and subterranean carbonous storage arrangements, I argue, are tied to the materiality of liquid versus gaseous hydrocarbons and to how understandings of this materiality have changed. Paying attention to what these storage spaces mean and to whom can lend insights into why storage is utilised and to what effect.
... The financialization of agricultural commodity markets is frequently cited as contributing to rising market volatility (Field, 2016). Bruno et al. (2017) demonstrate the existence of a serial correlation between peak grain prices and financial activity. ...
Article
Full-text available
In recent years, food insecurity has worsened despite decades of progress. Agrifood systems must evolve to address population expansion and climate change simultaneously. A problem of this magnitude necessitates the development of technologies that simultaneously increase (nutritious) food production and protect the environment. Based on an a diagram analysis of the economic model of technological change, this article explores various technological paths that can emerge in response to rising food prices and the need to preserve land. This article indicates, through the use of specialized literature, that the hypotheses derived from the analysis of the technological change model already exist. In addition, we investigate the potential geopolitical effects of these technological shifts on the global agri-food industry. Changes aimed at conserving land must encourage urban food production, systematic resource optimization on abundant high-quality land, and regenerative practices. In addition to rising food prices and population growth, the increasing significance of urban consumers and the internalization of environmental values should drive these various developments.
... The Gregory-Hansen procedure, reported in Figure 1, CBOT futures prices were increasing in that specific period, as opposed to Euronext futures prices and spot prices for all the selected EU MS. The literature has broadly examined US corn price volatility during the first decade of the twenty-first century, linking it both to financial speculation and the increasing demand for corn for biofuel production (McPhail et al., 2012;Field, 2016). ...
Article
Price transmission between futures and spot prices is a relevant issue, dealing with derivatives exchange for price management practices and efficient price discovery. Indeed, due to the increased market orientation of the Common Agricultural Policy, the development of new market strategies is of utmost importance for European farmers. In this context, this study examines the degree of transmission for the corn commodity between global futures price in either the Chicago Board of Trade or Euronext and the spot prices for a selection of Member States of the European Union. This study provides critical insights into the shape of the futures–spot price transmission, confirming a long‐run relationship and a cointegrating behaviour of price sets. [EconLit Citations: Q02, Q14, E3].
... model Swinnena i Vandeplasa z 2010 roku), jak równie powinien odnosi si do wspierania uczestników a cucha w zarz dzaniu ryzykiem (wymaga to podejcia interdyscyplinarnego w kszta towaniu narz dzi polityki publicznej). 36 Globalizacja wzmacnia konieczno stosowania instrumentów zarz dzania ryzkiem dochodowym [Hamulczuk, 2016;Kowalski, Rembisz, 2016]. 37 Indstry 4.0, 4 th Revolution, Industry Revolution 4.0 (IR 4.0). ...
Book
Full-text available
Celem monografii jest uogólnienie wyników badań prowadzonych w temacie pt. „Źródła wzrostu oraz ewolucja struktur i roli sektora rolno-spożywczego w perspektywie po 2020 roku” w czterech zadaniach badawczych. Wyprowadzone prawidłowości mogą stanowić podstawę do oceny i projekcji procesów strukturalnych w układzie rolno-spożywczym.
... The mainstreaming of commodity index speculation is important because it has been shown elsewhere in the literature that financial speculation by index funds and hedge funds is linked to global food price volatility, which has exacerbated global hunger (Tadesse et al., 2014;Lagi et al., 2011aLagi et al., ,b, 2012Gilbert, 2010;Mayer, 2012;Field, 2016). These accounts, however, only tell part of the story and may leave readers with the perception that markets, commodities, and financial speculation are autonomous and unconnected rather than socially constructed relations between people. ...
... New empirical evidence shows that financial speculation has significantly contributed to global food price volatility since the mid-2000s (Tadesse et al., 2014;Lagi et al., 2011aLagi et al., ,b, 2012Gilbert, 2010;Mayer, 2012;Field, 2016). Global food price volatility is important because it can drive up the street price of food in low-income and food import dependent countries like Mexico, Afghanistan, and Egypt (D'Souza and Jolliffe, 2012;Valero-Gila and Valerob, 2008;Lagi et al., 2011a,b;Barrett, 2013). ...
... The surge of speculative money into food commodities through US commodity futures markets has predominantly come from two types of speculators: index funds and hedge funds (Mayer, 2012;Gilbert, 2010;Tadesse et al., 2014;Field, 2016). Hedge funds pool the money of investor-owners under the management of one firm that's whole purpose is to generate profit through financial speculation using a wide variety of financial tools, including commodity speculation, and typically a lot of borrowingcalled "leverage" (PWGFM, 1999;Fichtner, 2013). ...
Article
Global food price volatility began shortly after Gorton and Rouwenhorst (2004, 2006) recognized that commodity index speculation was financially underexploited by institutional investors. Pro-commodity speculation and pro-index speculation arguments were not new, but gained new significance when the US Mortgage and Global Financial crises began to unfold and investors were looking for new places to funnel money. The literature has linked financial speculation by index funds and hedge funds to global food price volatility and the food riots in 2008 and 2011. The literature, however, leaves readers with the perception that index funds and hedge funds alone created the recent wave of commodity futures speculation. This paper argues that a small but important group of intellectuals were vital to the promotion and regulation of commodity speculation by index funds and hedge funds, which has affected the world as a whole.
Article
Full-text available
The Russia-Ukraine conflict has severely impacted global food security. This may increase the risk of supply chain disruption in low-income countries that rely heavily on grain imports. This study used production and trade data for wheat, barley and maize from 1995 to 2021 to construct longitudinal trade networks. On this basis, a cascading failure network model of shock propagation was used to identify the direct or indirect dependence of other countries on grain exported from Russia and Ukraine and the impact caused by trade shocks. The results revealed that the interruption of grain exports from Russia and Ukraine has resulted in an increasing impact on the global grain trade year by year and that the wheat trade is the most vulnerable to shock propagation, but it is also the most resilient. Russia and Ukraine interrupt exports of grain, causing more than 50% reduction in direct imports to 30 countries, including Eritrea, Seychelles, Kazakhstan and Mongolia. A shock propagation model that considers indirect dependence yields divergent results, with lower middle income (LM) countries in North Africa, Southeast Asia and West Asia facing supply shocks from reduced imports because they are unable to fully exploit the trade channels to balance grain supply and demand. Under the COVID-19 pandemic, this indirect dependence on imports is more prominent. It is worth noting that Eastern and Southern European countries often act as intermediaries to spread shocks during cascading failures. In the process of shock propagation, the main suppliers of grain include the United States, Canada, France, Argentina and Brazil. After the outbreak of COVID-19, the import demand faced by Australia increased significantly. We also examined how nodal characteristics relate to shock propagation dynamics and country vulnerability, finding that high import diversity, low import dependence and regional characteristics are effective in buffering countries from supply shocks. This study contributes to our understanding of the external supply risks for grain arising from the Russia-Ukraine conflict in a pandemic context, highlights the issue of accessibility in food security and provides trade policy recommendations to mitigate national vulnerability to food insecurity, thereby creating a resilient food trade system.