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UNCTAD forum warns of the
dangers of speculative distortions
The Secretary-General of the United Nations Conference
on Trade and Development (UNCTAD) has expressed concern
about “speculative distortions” that create volatility
in global commodity markets.
Addressing UNCTAD’s second Global Commodities
Forum, Supachai Panitchpakdi said there were serious
concerns about the way in which commodity markets
had evolved in recent years.
The two-day conference, which was attended by the
heads of several leading international organizations, was
held to discuss ways and means of finding both systemic
and systematic solutions to the chronic problems facing
global commodity markets.
The UNCTAD head told delegates at the forum, which
this year had Volatility in international commodity markets
as its central theme, that speculative distortions complicated
the economic management of the production and
trade of commodities.
“Such volatility has huge negative impacts on vulnerable
groups, such as low-income households in developing
countries, for whom food expenditure can account for
up to 80 per cent of household budgets,” he said.
Citing several examples, Panitchpakdi pointed out
that since mid-2010, commodities had, for the second
time in three years, been experiencing extremely high
price volatility.
He called for improved efforts to identify the policy
levers that could rein in excessive volatility and maintain
prices within a reasonable band and urged developing
countries, dependent on commodities, to continue
efforts to diversify their economies so that they were
less vulnerable to volatility in the respective markets.
Pascal Lamy, Director-General of the World Trade
Organization, warned that 2011 would see the prices
of most commodities rise, in keeping with an expansion
in demand, most notably in the world’s emerging
economies.
He maintained that China, India and Latin America
would be acting as a ‘pull’ for global commodities.
Lamy said that volatility was at its worst in tight and
closed markets and hence eased in open and deeper
markets.
He said the successful
completion of the Doha Round
of global trade talks could
help the situation a great
deal.
Andrey Vasilyev, Deputy
Executive Secretary of the
United Nations Economic
Commission for Europe,
noted that with global unemployment
being high and the
world’s industrialized economies
recovering only slowly
from the economic recession,
any rise in commodity prices
posed more difficulties.
He said it was important
to limit such prices to the
forces of supply and demand
and to reduce the influence
coming from financial
speculation.
Ali Mchumo, Managing
Director of the Common Fund Supachai Panitchpakdi, Secretary General of UNCTAD.
for Commodities (CFC), told
delegates that the challenge was to find practical workable
solutions to the perennial problems of the commodity
economy, adding that there was not much disagreement
that dependence on commodities was a development
problem.
He stated that recent developments in the commodity
markets had been the subject of intense discussion
by his fund and all its stakeholders.
Meanwhile, Hamadoun I Touré, Secretary-General of
the International Telecommunication Union (ITU), stressed
that the global community must work together to ensure
the long-term sustainability of the production and marketing
of commodities. Careful monitoring of those markets
was vital.
He noted that, for billions of people, the cost of meeting
daily food requirements took up a significant portion
of family incomes.
Reuters
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