Food speculation

Food speculation is betting on food prices in financial markets. Food speculation by global players like banks, hedge funds or pension funds is alleged to cause price swings in staple foods such as wheat, maize and soy. This theory was argued against by Adam Smith in 1776. He reasoned that the only way to make money from commodities trading is by buying low and selling high, which has the effect of smoothing out price swings and mitigating shortages.^[1]

The 2007–08 world food price crisis is thought by some to have been be partially caused by speculation.

References

1. Smith, Adam (1977) [1776]. An Inquiry into the Nature and Causes of the Wealth of Nations. University of Chicago Press. ISBN 0-226-76374-9.