As farmers confront mount ing costs, and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street’s speculation in grain markets.
Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos March 1.
The holdings jumped 29 percent in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records.
Niemeyer, who farms 2,200 acres in Auburn, Ill., won’t use futures to protect the value of the crop he will harvest in October. He says the contracts are too costly and risky.
“It’s the best of times for somebody speculating on grain prices, but it’s not the best of times for farmers,” said Niemeyer, 59. “The demand for futures exceeds the demand for cash grains.”
Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies.
