From BBC Q: Why are food prices and fuel costs are going up? Please Register or Log in to view the hidden image! BBC suggests it's coming off the 2008 peaks, which were good harvests for most basic foods helped prices to fall back. Now, in 2010, severe weather in some of the world's biggest food exporting countries damaged supplies. And THAT has helped to push food prices almost 20% higher than a year earlier, according to the FAO. (The 2010 figure was slightly below the annual measure for 2008 as a whole.). But, this reminds me of when communist countries used to crap on about how "bad the weather was" and THAT'S why they were starving to death - apparently they always have bad weather (see NK or China 30 years ago). Of course the truth was they mismanaged their economies. I think commodities are rising because of all cash Bernanke flooded into the system is looking for a place to make good safe returns. I won't be surprised if Americans can't afford their own food in a few years..... err, I mean, "Bad Weather"....
Of course weather and inflation are factors - but in this particular case you have overlooked the two PRIMARY causes for the increase: OPEC and speculators in the oil futures market. All increases in oil prices result in raising food prices in two way - direct production costs and transportation costs.
Bad weather is very handy for fuel companies though, especially if they've jumped on the Bio-diesel wagon. After all, failing crops means less Bio-diesel for the demand which inflates bio-diesel prices. (If Oil Companies thought bio-diesel wouldn't generate the same returns I'm sure they can think again now)
Never! It has only one motivation/reason driving it - profits. Regardless of tight/relaxed money supply, people speculate because they want to make money - pure and simple.
Yes, but if the banksters weren't awash with money, as in - if we hadn't bailed out a bunch of wealthy elite, then I don't really see where the money to speculate would be in the first place. IOWs, there's a lot of cash swashing around in the upper 1%'s war-chests and they pay people to turn that cash into profit, hence, [correct me if I'm wrong] speculation . I mean, EVERY commodity under the sun is breaking all time highs (oil only being one of many).
Well, if we're talking about U.S. banks, they don't even touch the commodity market. Those investments are made primarily by individuals and mutual funds that deal with commodities. Some retirement funds do also as well as some insurance companies - but the insurance companies don't put much of their spare cash in such things. While that's true, you must also keep in mind that oil is at the very BASE of practically EVERY commodity listed on the exchange. Therefore, any increase in speculation of oil futures boosts the entire market.
