Under pressure from Oxfam, the BNP has suspended subscriptions on two of its commodity funds. This was done after Oxfam released a report attacking some french banks over their exposure in food companies. Oxfam wants to stop speculation on commodities which will push food prices higher. Germany's LBB Invest banned soft commodities from its funds and LBBW Asset Management has also stopped investing in soft commodities. DB has set-up an internal task force to review price volatility on soft commodities.
This is a unique pressure to close funds so that investors will not have access to commodities as an asset class. This could be considered the latest fight in the battle against speculators. This battle has been going on since the introduction of futures markets. There have been issues with speculators pushing prices higher and making food too expensive. There ave been issues with speculators driving food prices lower. The argument is that price volatility hurts small farmers so get those who could move prices out of the market. But what will be the fair price for these commodities?
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