Food speculation - A factual and analytical examination

The prices of a wide range of agricultural commodities reached their nominal all-time highs in 2008, before subsequently falling sharply. As a result of the sharp rise in food prices, both in nominal and real terms, hunger protests and uprisings broke out around the globe in 2008 and 2011. At the same time as food prices were rising, there was a noticeable increase in activity by index-based funds on the futures markets for commodity derivatives. In the following paper, Laura Wehrheim assesses a possible causal link between index speculation on the agricultural commodities futures market and rising and increasingly volatile food prices. The central question is whether the activities of index funds are beneficial or detrimental to the public good.