It is currently Thu Mar 28, 2024 9:58 pm



Post new topic Reply to topic  [ 1 post ] 
 Unholy trade of making millions out of misery 
Author Message
Site Admin
User avatar

Joined: Sun Oct 11, 2009 8:59 am
Posts: 6532
Location: Friendswood, TX
Post Unholy trade of making millions out of misery
Chris Mahoney's candour has shed light on secretive industry which impacts on the world's poorest

Tom Bawden Thursday 23 August 2012

Every so often a business titan forgets himself, drops his guard and tells us what he’s really thinking.

So it was that a big cheese at the world’s largest commodities trader bragged that the worst drought to hit the US since the 1930s – and the worrying volatility in food prices around the world – will be “good for Glencore”.

On one reading, Chris Mahoney, the business titan in question, appeared to be celebrating the destruction of 45 per cent of America’s corn and 35 per cent of its soya bean crops this year. The crisis threatens to push cereal prices to a new record in a move that will put further pressure on the world’s poorest people and raises the prospect of a fresh round of food riots.

Mr Mahoney’s comments have put the spotlight firmly back on food prices, which rose by an average of 6 per cent globally in July, while cereals accelerated considerably faster still, jumping by 17 per cent to within a whisker of their record in April 2008, according to the UN.

“The US weather starting mid-May...has been among the worst three or four years of the century, comparable to the dust bowl years of the mid-30’s,” said Mr Mahoney, Glencore’s head of agriculture, suggesting that it won’t be long before cereal prices hit a new record.

“In terms of the outlook for the balance of the year, the environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities [the sale and purchase of an asset to profit from price differences in different markets],” he added.

“I think we will both be able to provide the world with solutions, getting stuff to where it’s needed quickly and timely, and that should also be good for Glencore.” :awe

His boss, the Glencore chief executive Ivan Glasenberg, described the current volatility of the food market as “a time when industry fundamentals are the most positive they have been for some time.”

Of course, Mr Mahoney is entitled to profit from the trials and tribulations of the food market and in some ways a commodities trader like Glencore, which is listed on the London Stock Exchange but headquartered in Switzerland, can help to ensure that the world is fed as efficiently as possible.

But a growing army of critics, including the United Nations, argues that traders and speculators are making the food crisis far worse than it needs to be.

Some banks – among them Germany’s Commerzbank and Deutsche Bank and Austria’s Volksbanken – have even removed agricultural products from some of the investment funds they offer their clients, sensitive to accusations that speculation is pushing up prices. However, other big fund managers in this area, such as ETF Securities and iShares, say they have no intention of stepping back.

Jose Graziano da Silva, the director-general of the UN’s Food and Agricultural Organisation (FAO), has blamed food price volatility on “excessive speculation in derivative markets, which can increase price swings and their speed” while Argentina’s President Fernandez warned that “financial speculation is exacerbating market fluctuations and this exacerbation is generating uncertainty.”

The flood of speculative money into food dates back to 2000 when the US – which dominates the global food market – substantially deregulated trading in commodities. This paved the way for investors to pile into wheat, coffee and all manner of other “soft” commodities, allowing London and New York to build substantial trading hubs to benefit from an explosive new market.

Orchestrating the mushrooming industry from their phones and computers in the City and Wall Street, bankers from institutions such as Barclays, Goldman Sachs and Morgan Stanley have collectively channelled an astonishing $200bn of investment cash into agricultural commodities in the past decade. :yamon

Read more here: http://www.independent.co.uk/news/business/news/unholy-trade-of-making-millions-out-of-misery-8073599.html

I don't know how these folks sleep at night - I really don't. :rant

_________________
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little. - FDR


Thu Aug 23, 2012 5:59 pm
Profile
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 1 post ] 


Who is online

Users browsing this forum: No registered users and 10 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Jump to:  
cron
Powered by phpBB © 2000, 2002, 2005, 2007 phpBB Group.
Designed by Vjacheslav Trushkin for Free Forums/DivisionCore.