Agricultural commodity-futures markets require tighter regulation to avoid a distorted balance between physical and futures trading, said Stephane Le Foll, France’s farm minister.
The food crisis of 2008 showed a need “to be vigilant about the way we allow markets to function, but also how we frame them,” Le Foll said at a grain-industry meeting in Paris today. “We have to be more strict on the framework.”
Le Foll said while there is “always a need” for agricultural futures markets, they should function primarily to provide price-risk coverage for producers and users. A framework is needed to avoid “a blow up of the equilibrium between physical and futures markets,” he said.
World food prices as tracked by the United Nations’ Food & Agriculture Organization have more than doubled in the past decade. The U.S. State Department estimates surging food prices triggered more than 60 riots worldwide from 2007 to 2009.