In a long-awaited move, the US Commodity Futures Trading Commission on October 18 approved limits on trading in the commodities markets. Specifically, the new rules limit the number of commodity contracts that any investor can hold in agriculture, energy, or metals contracts.

FEWS NET has released its Global Price Watch for September 2011, citing continuing high prices in Kenya, Ethiopia, and Somalia. Africa's newest nation, South Sudan, is also facing increased prices on some staple goods due to conflict and trade restrictions. Global rice prices saw a moderate upswing, due in part to Thailand's new rice price subsidy.

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The HarvestChoice AgMarketFinder Tool is a collaborative development innovation from IFPRI, Esri, and SpatialDev.

The International Grains Council has released its grains market report for September 22, 2011. World grain markets saw a retreat in September, a reverse from their strong positions in July and August. As global supply did not change radically, this change in the market is due primarily to financial developments such as the renewal of a strong US dollar.

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A Commentary by Maximo Torero

Thailand’s rice exporters are warning that the country’s 2012 rice exports could drop by as much as 30-40 percent as the result of a proposed government policy that would guarantee fixed prices for both plain white rice and jasmine rice. The Pheu Thai Party, which was elected into power in July, has promised farmers fixed prices of 15,000 baht ($US 500) per ton for plain white rice and 20,000 baht (US$ 667) per ton for jasmine rice.

With an estimated 44 million people falling into poverty since June 2010, rising food prices and increasing agricultural price volatility is at the forefront of global attention. Commodity exchanges have long been touted as a way to mitigate the effects of price volatility and increase economic efficiency in a liberalized market environment. As with other aspects of global agricultural markets, however, exchange markets are facing increasing global interdependence as traders draw on information generated both domestically and internationally.

The economic, political, social, and nutritional impacts of food price volatility and price spikes are clear. In the 2007-08 food price crisis, 33 countries saw violent riots and social unrest as a result of rising food prices; in 2011, increasing food prices have been at least partially blamed for political turnover in Tunisia and Egypt, as well as riots in several other countries.

Successful global agricultural trade hinges on open, secure agricultural markets. Such markets provide risk management by allowing for inter-regional diversification of crops and food products and by reducing price differences through market integration. In other words, secure, well-functioning markets can balance one country’s food deficit with another’s surplus, and vice versa. In this way, global trade can support global price stability and food security.

The daily global news continues to be inundated with stories of rising food prices, and accompanying rises in poverty and hunger. Recent droughts in China have been added to the list of factors driving food prices, specifically commodity prices, up around the world. Policymakers are now faced with decisions regarding the appropriate response to these increases.

The Famine Early Warning Systems Network (FEWS NET), funded by USAID, has released its latest monthly price watch detailing staple food prices for February 2011. These reports provide food security updates for 25 countries vulnerable to food insecurity, focusing on impacts on livelihoods and markets. These updates can help policymakers recognize and mitigate potential threats to food security.

Download the latest reports below. For more information regarding FEWS NET, please visit www.fews.net.

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