Commodity price surge is debated

Federal regulators said Tuesday that placing tougher restrictions on agricultural commodity trading would not alleviate high and volatile prices in those markets and could make matters worse.

Farmers, ranchers and grain processors met with regulators in Washington to discuss the causes behind turbulent markets and historically high prices for wheat, corn and other foodstuffs.

Farmers and food producers contend that speculation by Wall Street investors -- not a supply-demand imbalance -- is what’s driving up prices and volatility, making it harder for commercial buyers and sellers of grain to use the exchanges as a tool for limiting the risks of price uncertainty.

In the last year, prices for corn and cotton have ballooned roughly 50% and 65%, respectively, industry officials said.

“The market is broken, it’s out of whack and someone needs to step in and give some relief to cotton producers,” said Billy Dunavant, president of cotton producer Dunavant Enterprises.

But members of the Commodity Futures Trading Commission cautioned against blaming speculators, saying current market conditions could be explained by a weak dollar, higher transportation costs and small inventories caused by poor weather.