Ontario Agriculture

The network for agriculture in Ontario, Canada

The Province of Ontario is planning to bring in new rules to regulate the derivative markets in Ontario.  The finance Minister is supposedly set to table a bill which would "help the Province maintain regulatory leadership and international competitiveness". The "securities watchdog will be given broad new powers over the trading of derivatives in the province".



It is no secret that the derivative markets in the USA were a contributing factor to the economic meltdown in 2008. Of particular note, for someone with their feet grounded a farm, the agricultural commodity markets went nuts during the wild derivative ride just before the recession was officially recognized.  To say, commodity prices were "unpredictable" a few years ago would be a mild statement.  



Goldman Sachs, by many accounts, led the way in trading agricultural (food) derivatives.  Jean Ziegler, the former U.N. chief food expert warned when speaking about the banks and their food derivative trading: "We have a herd of market traders, speculators and financial bandits who have turned wild and constructed a world of inequity and horror.  We have to put a stop to this."  



Last week, it was reported that JP Morgan Chase and Co. and MF Global Holdings Ltd. "bought call option contracts that would pay off if corn rose above $10 or $11 a bushel next spring. The options are traded at Chicago-based CME Group, along with futures based on grain, cattle, hogs and other commodities."


Price rationing could take it up further. I would certainly think we’re headed higher.

The timing of new provincial regulations are curious.... not a national strategy... a provincial move..... but I question if the Province has any intention, any authority to regulate derivative commodity trading when prices are set at the CBOT. We see McGuinty divesting himself from agricultural marketing yet he wants us to believe that he will regulate derivative trading. 



Again, for someone with their feet on the farm, McGuinty's actions in regards to agriculture and his proposals in trading (marketing) are diametrically at odds with each other.

http://www.cattlenetwork.com/Think--5-Corn-Is-Expensive--Some-Are-B...

Views: 112

Reply to This

Replies to This Discussion

Thanks for pointing this out Joann.
I hope they don't spend much time and money on this type of legislation.
The ag commodity markets are governed by the big exchanges in the USA...in reality, I am not sure they know where Ontario is.

Joe
The regulate the future, I have heard it all. Regulation in the form of tax on buy or sell any shares in the stockmarket. Before it has dividends. Thats like placing a bet and been taxed on it. You sure have a win with McGuinty.
True. The prices are at this time set in the USA but there is some indication the U.N. wants to manipulate the marketing of foods globally.

Mr. McGuinty might have some fancy idea about regulatory controls on derivative markets and, as you allude to, he probably has absolutely no concept or knowledge about the agricultural commodity derivative markets.... but it is interesting to note that Mr. McGuinty's environmental policies had a hand in the the derivative pricing of grains.

There appeared to be a moral understanding that food could/should be traded on a basis of need.... supply and demand. If weather became a factor in production (for example)..... the methodology of pricing would follow trends.

Along the way, grains became something more than just "food". Corn, beans, wheat... could now be used for ink, plastics, car parts, paints, dyes, carpets, insecticides, chalk, paper, textiles, wallpaper.... there is a long list. A small percentage of grain was marketed for industrial use... but little was said as most would agree it was "surplus" commodity use.

But in recent years, people such as McGuinty advocated alternative uses for grains and other agricultural products such as manure. McGuinty ventured into the bio-fuel realm with a single environmental focus.... to the point of mandating bio-fuel consumption levels.

In reality, legislative policies transcended agricultural products from a food source into the category of industrial energy commodities. Ethanol marketing now is a huge consideration for corn trading.... so if oil, gas and hydro can be bought and sold on a derivative market by speculators.... why should grains be treated different? Manure, corn stalks, other agricultural wastes were considered fertilizer for eons but now it competes for bio-fuel inputs.

What we have witnessed is a government that was in such a rush to develop "green energy" policies that they did not fully discuss the impact of industrial uses of agricultural commodities... hence the volatility in the derivative markets... rippling into the impact of food supplies across the world..... the mantra of social justice for the hungry has turned into a environmental investment bonanza.

It is easy to see how "green" policies took the morality and ethics of grain trading into the realm of "investment earning category".... and Mr McGuinty wants to fix it........ how??????


Joe Dales said:
Thanks for pointing this out Joann.
I hope they don't spend much time and money on this type of legislation.
The ag commodity markets are governed by the big exchanges in the USA...in reality, I am not sure they know where Ontario is.

Joe
McGuinty NEVER met a sector of the province he couldn't pass on regulating to death. Why should derivtives have a pass on his nanny state mentality? Will the last person left remember to turn out the lights....oops sorry, they will already be off for non-payment.
Hi Steve:
I take it you might not vote for Dalton his election???
Is there a better alternative for Ontario Agriculture?

Take care and hope you are well.

Joe
Hitler

Joe Dales said:
Hi Steve:
I take it you might not vote for Dalton his election???
Is there a better alternative for Ontario Agriculture?

Take care and hope you are well.

Joe

Reply to Discussion

RSS

Agriculture Headlines from Farms.com Canada East News - click on title for full story

Why farmers rely on cash flow projections

Agriculture is a numbers game. Farmers need to determine a fair land rental price or if their operating line of credit will get them through tight times. While uncertainty around factors such as the weather makes it nearly impossible to know exact revenue and expense numbers, it is possible to get accurate estimates using cash flow projections.

Canada’s Agri-Food Exporters Praise Historic Coming-into-force of CUSMA

Dan Darling, President of CAFTA, today issued the following statement to mark the coming-into-force of the Canada-US-Mexico Agreement (CUSMA).

CUSMA launch: What you need to know

CUSMA secures gains in GDP of USD 5.1B, according to Global Affairs Canada. Trade concessions involve increased market access to Canada’s supply-managed sectors.

Introducing PLATO, the Phosphorus Loss Assessment Tool for Ontario

Keeping soil covered and minimizing erosion is a key principle of soil health.

OFA welcomes new and returning directors to the provincial board

Following a three-week nomination period for directors in five zones across the province, the Ontario Federation of Agriculture (OFA) is proud to announce the return of a strong contingent of agricultural leaders as well as the addition of one new member to the organization’s Board of Directors.

© 2020   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service