Protectionist tariffs the main catalyst behind elevated commodity prices.

http://www.tradingmarkets.com/.site/forex/commentary/fxarticles/-76440.cfm

The News:
It's not news you're going to find in mainstream American media. Globally, food shortages are sparking violence, protectionist policy, and hording. This week alone food riots broke out in Africa, food hording is suspected by traders in Thailand and countries like China and India are implementing protectionist trade tariffs to keep domestic farming production from being exported.


The Bottom Line:
At the end of the day, global protectionist tariffs are the main catalyst behind elevated commodity prices. But most governments don't want you to know that. The mainstream media doesn't understand it... and that's why you haven't read about it yet.

Seems to me, the tariffs are being passed because food supplies are getting shorter in the countries that are passing them.

Of course, it's more comforting to just blame "the tariffs." It's like blaming the "the speculators" for oil prices. Makes it seem like a problem that can be banished if we just knocked the right heads.

I would agree that they have been partly responsible. But not largely.

It's essentially like buying up oil. It skews the supply/demand and drives prices up.

Quite simply oil prices have nearly doubled in the last few years, while the actual supply hasn't diminished by half.

I know that we're running out of oil, and more people are using it but the only way to explain the jump in prices is market shennanigans.

which is the transition from a buyer's market to a seller's market. When the demand crosses the threshold of supply, the effect on price is nonlinear. A change in either supply or demand by just a few percentage points results in a much larger price increase. We crossed into a regime where the buyers are in a bidding war, driving price upwards. Speculative investment chasing performance can surely take that scenario and add even more to the price.

There have been observations about the "virtues" of speculation. Ironically, speculation is one way for a market to achieve foresight. I might say "well, the future of oil is ever decreasing supply, and so speculation provides a way to the market to anticipate that problem." On the other hand, I might also say "those speculating motherfuckers are taking our problem and making it even worse." The fact that both statements might be true speaks to how we may be in checkmate.

Went into the inevitable transition. However it's no secret that Ken Lay's energy policy led to current prices.

sure have made it worse.

The reason the demand for the food has grown is a growing world population and that the people in the developing world are getting more money and they want more stuff - especially food. I don't blame them just noting the actual causes.

The fact that China and India are passing these types of tariffs indicates that they've learned from history. In the Great Irish Potato Famine, 1 million Irish starved to death, and another million refugees fled the island, because their potato crops failed. At the same time the Irish people were starving, the island was exporting vast quantities of food to England. Why? Because the English were wealthier and could afford to pay more for the food. The people starved while they watched the farms around them export large amounts of food to the wealthy overseas.

Tariffs like those enacted by some countries recently will prevent that from happening. They recognize that the first priority of domestic agriculture should be to feed your own domestic population. Agricultural exports should be limited to food grown in EXCESS of domestic needs.