April 21, 2008

US regulators to clear funds as cause of escalating grain prices

US regulators are expected to clear speculators such as hedge fund or pension funds as the forces responsible for pushing up grain prices.

The US Commodity Futures Trading Commission will meet farmers and traders on Tuesday to discuss the jump in agriculture commodities' prices.

Previously, US politicians and farming associations declared that speculators are behind the huge price increases.

The commission will likely blame the escalating prices to robust demand, adverse weather, government trade restrictions and the impact of the weaker US dollar, US officials said.

Bart Chilton, one of the four CFTC commissioners, said the data from the commission's economists showed that there is no a correlation between excessive speculative activity and prices at this time.

Chilton said that market fundamentals appear to be functioning appropriately.

Walt Lukken, CFTC acting chairman, said there are varying opinions as to what is driving agricultural commodities.

Senator Byron Dorgan recently said that commodities futures markets were suffering from unbelievable speculations.

Market volatility has risen, with prices' daily movements up 25-30 percent. Previously, they rarely exceeded 1 percent.