The price of tortillas
Tortillas
Didn't the authors of these articles check with each other?
CHICAGO, Jan. 18 — Wall Street commodity funds that have been
investing heavily in energy futures are now loading up on agricultural
commodities like corn and livestock futures.
The flood of investment has raised concerns among grain traders and agricultural
producers that speculative money is gaining an undue influence over their
markets, which help set the prices of raw commodities for a host of consumer
food products.
A recent study by the Commodity Futures Trading Commission, which oversees the
nation’s futures markets, has found that Wall Street commodities index funds —
investments in futures that track the underlying commodities of a particular
index — have a much heavier concentration in agriculture futures markets than
many had expected.
The commission found the Wall Street funds control a fifth to a half of the
futures contracts for commodities like corn, wheat and live cattle on Chicago,
Kansas City and New York exchanges. On the Chicago exchanges, for example, the
funds make up 47 percent of long-term contracts for live hog futures, 40 percent
in wheat, 36 percent in live cattle and 21 percent in corn.
“These are jaw-dropping numbers,” said Dan Basse, president of AgResources, an
agricultural research firm in Chicago. “We have seen this explosion of open
interest in agricultural commodity trading, and now we know it is largely
related to the commodity index funds.”
The index funds may be stoking volatility, traders and analysts say, because the
agricultural markets tend to be far less liquid than other commodity markets,
like energy. Such volatility could lead to higher prices for buyers and sellers
of agricultural commodities, including food at the grocery store.
Facing public outrage over the soaring price of tortillas,
President Felipe Calderón abandoned his free-trade principles on Thursday and
forced producers to sign an agreement fixing prices for corn products.
Skyrocketing prices for corn on the world market have pushed up the price of the
humble tortilla, the mainstay of the Mexican diet, by nearly a third in the past
three weeks, to 35 cents a pound in Mexico City and even higher in other parts
of the country.
Half of the country’s 107 million people live on $4 a day or less, and many of
them survive largely on tortillas and beans. The price increases have riled the
public to such an extent that it has created a political storm that threatens to
swamp Mr. Calderón’s fresh presidency.
This month, the president, who took office in December, was booed and heckled at
events around the country over food prices. Mexican lawmakers called on him to
impose price controls, while leftist opposition leaders suggested that he was
protecting giant corn companies. One editorial cartoonist depicted him falling
from a tower as tortillas flew upward like birds.
Even members of Mr. Calderón’s own conservative party in Congress called on him
this week to do something quickly.
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