Food Prices, Ethics and Forms of Speculation

27 Pages Posted: 26 Oct 2020

See all articles by Don Bredin

Don Bredin

University College Dublin (UCD) - Department of Banking & Finance

Valerio Potì

University College Dublin

Enrique Salvador

Universitat Jaume I - Department of Finance and Accounting

Date Written: August 25, 2020

Abstract

This paper examines the role of speculative motives in the deter- mination of commodity prices and specifically food related commodity prices. The motivation for this study is the considerable flow of funds into commodities, the widespread view that the process of financial- ization has led to greater levels of speculation and that speculation is the primary cause of regular spikes in food prices since the turn of the century. We consider two forms of speculation, a biasing influence (manipulation) and a correcting influence (speculators), relative to the fundamental price. While both forms of speculation are relevant, they are small in terms of their influence on overall prices. We do however find some evidence of an increased role being player by manipulators during the period most associated with financialization.

Keywords: Commodity prices, financialization, commodity speculation

JEL Classification: Q49, G12, G15

Suggested Citation

Bredin, Don and Potì, Valerio and Salvador, Enrique, Food Prices, Ethics and Forms of Speculation (August 25, 2020). Michael J. Brennan Irish Finance Working Paper Series Research Paper No. 20-9, Available at SSRN: https://ssrn.com/abstract=3719144 or http://dx.doi.org/10.2139/ssrn.3719144

Don Bredin (Contact Author)

University College Dublin (UCD) - Department of Banking & Finance ( email )

School of Business
Blackrock, Co. Dublin, 4
Ireland

HOME PAGE: http://www.ucd.ie/bankingfinance/staff_bredin.html

Valerio Potì

University College Dublin ( email )

M. Smurfit School of Business
Carysfort Avenue, Blackrock
Dublin, Co Dublin
Ireland

HOME PAGE: http://https://people.ucd.ie/valerio.poti

Enrique Salvador

Universitat Jaume I - Department of Finance and Accounting ( email )

Castellon
E-12071 Castello de la Plana, Castellón de la Plana 12071
Spain

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