U.S. Cracks Down – Sort of -- on Food Speculators

by Sarah Glazer

U.S. commodity regulators on Tuesday approved sweeping new curbs on speculative trading in food commodities, the most aggressive anti-speculation move by a government since food prices began to rise in recent years. But the vote may not be the end of the story.

The latest rules will limit trading by banks and investment funds, which consumer groups blame for the rising food prices. But after heavy lobbying by Wall Street, the rules passed Tuesday by the Commodity Futures Trading Commission were watered down significantly.

In addition, the commission-- aware that Wall Street could challenge the action in court -- agreed to delay many of its new rules for at least a year.

The European Union is considering similar rules but faces strong opposition from London, a major trading center. France had pledged to curb food speculators when the G-20 summit meets Nov. 3-4, but political leaders’ ardor has cooled in recent months, as we report in this week’s CQ Global Researcher on “Rising Food Prices.” Whether the American regulators’ latest action will influence Europe’s approach remains to be seen.