Reuters reported today that Ghana’s Cocoa Board (COCOBOD) has decided to increase the farm gate price for the next cocoa year from 1,200 cedis ($1,090) to 1,632 cedis ($1,384) per ton. This is welcome news for cocoa farmers all over Ghana who have been complaining about the low prices offered by COCOBOD during the last season.
Are Speculators the Problem?
Last Friday, the New York Times reported that the increase in commodity prices and the resulting increase in prices ordinary consumers pay has attracted the attention of regulators and politicians. The specific target are speculators who are suspected of having driven up futures prices. The article goes on to repeat the arguments made by the advocates of futures trading–that speculators are necessary to make the futures market work and that there is a big difference between a speculator and someone who manipulates the market.
I thought that it might be good to explain how the futures market works, something the article fails to do. Continue reading “Are Speculators the Problem?”
