FFC Urges Stricter Speculative Position Limits On Agriculture And Energy Derivatives

March 11, 2014

Friends Fiduciary, along with other faith based investors, have written in support of Commodity Futures Trading Commission (CFTC) regulation while urging the CFTC to regulate beyond their proposed rule. Scholars, governmental agencies and market analysts have all shown that excessive speculation in commodity markets can also excessively influence prices. Low-income families in the developing world that often buy raw commodities in bulk are most threatened by excessive speculation in commodity derivatives. A 2009 Senate Permanent Subcommittee on Investigations revealed that speculators were responsible for disruptions in the wheat market and the three fold increase in the price of wheat from 2005 to 2008, meaning that millions of low-income families were consequentially spending three times as much on this staple food. The food and energy price bubbles of 2008 led to 250 million people worldwide without enough food, as well as food riots in 30 countries. In Kenya, Quakers heard these alarms from their own ministry sites. As socially-responsible investors representing the concerns of our Quaker constituency, FFC urges the CFTC to adopt a lower limit to speculative positions. Spot-month position limits at 25 percent of deliverable supply will not provide sufficient safeguard against excessive speculation, prevent market manipulation and protect farmers and consumers. To read the full letter, click here: To view listings of evidence on negative impact of commodity speculation,  click here: