Brussels, 01/02/2011 (Agence Europe) - The contention between France and the European Commission has been forgotten: in its communication Tackling the challenges in commodity markets and on raw materials, which it will adopt on Wednesday 2 February, the Commission is expected to acknowledge that speculation increases price volatility of, especially agricultural, raw materials. It will, however, stress that the extent of the link between financial markets and physical markets will have to be looked at more closely.
With its communication, the Commission intends to take forward discussion of these issues on the international stage, and in particular in the G20. The new G20 Chairman, French President Nicolas Sarkozy, wants to deal with price volatility as a matter of urgency.
The Commission will suggest advancing on three fronts: there has to be investment in agriculture, so that supply responds to demand and to support the development of agricultural policies in developing countries; it has to be made sure that the markets work properly through regulation of these markets and through greater transparency in public and private storage; crises resulting from political decisions have to be avoided through better coordination between countries. For example, last summer, Russia put an embargo on exporting wheat, resulting in a price rise.
To tackle speculation, France is advocating position limits. The Commission is more reticent on this, but does not rule out such a measure. The Commission notes that access to commodities is essential if the economy's production capacity is to be maintained and the well-being of citizens ensured. On the major commodities markets (energy, metals and minerals, agriculture and foodstuffs), prices have been on an upward trend since 2009. Over the last few years, commodity price volatility has had a negative impact, to differing extents, on both consumption and production. (L.C./transl.rt)