Bankers Are Driving the Wheat Price Explosion, Not the War in Ukraine

I never understood the problem with food commodity speculation. When bankers buy wheat in anticipation of higher prices and the prices in fact go up, the bankers successfully buffered supply by decreasing supply when there was more wheat and increasing supply when there is less wheat.

So for the banker’s actions to have a negative impact on the world, they necessarily must lose money on their trades.

And if the price should only increase because of the bankers, it will decrease again when they sell, it’s a zero-sum game minus trading and storage fees.

I found the site tad bit suspicious when they proclaim they are the "small indie company" doing the good fight multi national companies won't (got nothing against left wing causes but I do think far left is a problem) .

According to mediabias:

https://mediabiasfactcheck.com/novara-media-bias/

The site is far left with mixed factual/credibility.

Is Novara Media a reputable source?

Couple of issues with the article.

1. The proof that basic commodities are extremely volatile is a page on understanding investing. https://europe.pimco.com/en-eu/resources/education/understan...

2. The notion that prices are driven by financial speculation is only supported by a graph that shows the price of wheat changes while production has remained the same. Which is really insufficient to make that conclusion. I do think that the fact the prices went up during the 2008 financial crisis might be worth pointing out, but at least on Wikipedia https://en.wikipedia.org/wiki/2007%E2%80%932008_world_food_p... there's a whole list of possible causes listed and none of them addressed in the article.

3. The article never attempts to quantify even roughly how much of the food price increase is due to financial speculation versus the drop in supply, even though there isn't much proof for the former driving sustained food increase on the macro scale whereas a drop in supply leading to price increases is inevitable.

4. The author seems to object to deregulation of the commodities market without actually linking/or having any analysis on its impact on commodity production and prices.

5. The author decries bankers 'ploughing capital' into commodities market, but putting capital into at least the futures market is exactly what leads to more of it - e.g. more food.

I would say in general when making a case for something as important as the issue of food security, and imposing drastic change in national policy, you can't just start with the assumption everything bankers touch is bad and then carry on from there. You should at least address counter-points to your arguments even if you are not able to completely refute them, instead of pretending like they don't exist.

I think the goal of preventing food starvation is a laudable one but as in most cases I think the most efficient way of doing so would just be through aid/loans to the people who are suffering the most instead of trying to ration out the current supply of wheat to the whole world. I think in a world where most nations struggle to even care for their own poor, it is still refreshing to see the case made for a place where we try to alleviate suffering regardless of the location of it.

But I would say the whole scale rejection of free-markets is likely to be counter-productive, especially in the long run. The most successful poverty elevation programmer in the world occured when China opened up its economy, embracing free markets and foreign investment (e.g. money from greedy bankers).

The article is far from truth, if not just misinformation.

Russia will become under embargo because of aggression, so their export must shrink.

But Ukraine have possibility to produce much more food, it is 100% possible to compensate whole Russian share, IF will be possible to transport this food from Ukraine abroad.

To be exact, Ukrainian sea ports before war, where far from 100% load, so they could grow volumes, even if we subtract all other possible transport ways from equation.

For agriculture, also Ukrainians last years constantly exceeded EU quotes on agriculture supplies and have large unused squares.

And now Russia just blocked all sea export from Ukraine, and tens of millions tons of food laid in Ukrainian warehouses, because other transport ways, trucks and railroads, are not powerful enough for such large quantities, or just dead ends, because clients are not in Europe, but mostly in Asia/Africa.

And even more - already known few cases, when Russians steal food from Ukraine and try to sell those stolen goods.