Investors fuel futures frenzy in agricultural products

The recent fevered commodities trading in China hasn’t been limited to iron ore. According to The Wall Street Journal, investors have piled into futures for everything from wheat and cotton to eggs and asphalt. Analysts reckon much of the interest is coming from speculative investors who have been turned off to China’s stock markets by tighter rules. Rampant speculation means Chinese futures markets often don’t reflect economic or industry fundamentals, while excess liquidity attributable to loose monetary policy is further driving the spike in interest in agricultural futures. For example, turnover of corn futures on the Dalian Commodities Exchange was up nine times to $30 bn year-on-year in April despite corn prices falling 10%.