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Thursday, 27 January 2011

France blames speculators

France, the European Union's biggest grain producer, has blamed financial speculation for contributing to soaring commodity prices, although analysts are divided over whether this has played as significant a role as economic fundamentals in driving price levels. Wheat prices in Europe nearly doubled in 2010, while a global economic rebound helped push oil prices nearly 30% higher in the last four months of 2010 alone. Policymakers are concerned that rising food prices could stoke inflation, protectionism and the kind of unrest that has been seen in Tunisia and Algeria in recent weeks. High food prices could also hit consumer spending in fast-growing emerging countries that are leading the revival of the global economy. Washington has already acted to prevent spikes in food prices and Europe is following suit, with proposals that would force traders to disclose their positions, put a cap on large trades and give regulators new powers to intervene to curb speculation. But there are deep divisions within the broader G20 on how far any new global regulations should go, with major commodities producers pitted against consumer nations. "It's going to be difficult to have a global consensus on position limits until the case is better made," a G20 source told Reuters after Sarkozy spoke.

Source: Euractiv