For some Win Some - Lose Some but for us we all lose

Britain's most powerful grain company, jointly owned by Cargill and Associated British Foods, bought and took delivery of all the available UK feed wheat last month. The series of purchases of approximately 225,000 tonnes of feed wheat now worth in the region of £40m by Frontier Agriculture, was described by a number of traders as "unprecedented".

But the move appears to have backfired. With wheat in short supply three months before harvest, an unusually dry spell combined with a Russian export ban imposed last August sent wheat futures spiralling. Frontier's purchase sent May Futures even higher compared with other contracts. This could have created millions of pounds in profit for Frontier. But the Russian government's announcement in May that it would lift its export ban, much-needed rain and the temporary closure of a major bio-ethanol facility on Teeside, which uses almost 100,000 tonnes of wheat each month, led to a sudden price drop. This meant Frontier could have lost between £5m and £10m on its acquisition.

Deborah Doane, director of anti-poverty campaign group World Development Movement, which has been a vocal critic of what it describes as opaque commodity markets, said: "The end result of trades like this is a volatile market that often has no connection to real supply and demand, wreaking havoc on consumers in the UK and in poor nations."

G20 agriculture minister have met seeking ways to curb food price volatility, with Bruno Le Maire, France’s agriculture minister, saying that an agreement is essential to stop the 21st century from becoming “the century of hunger.”

“I will not sign a deal that will not include the question of the regulation of financial commodities markets, let’s be very clear,” Mr Le Maire said. He added that the main opponents of such measure were Britain and Australia. “The fight against excessive speculation is a cardinal point for France,” the minister said.

Nor is speculation limited to the grain markets. Howard Schultz, president of Starbucks, the world's largest coffee chain, has attacked speculators for pushing up the price of coffee to a 34-year high. He said that the current spike in the cost of commodities such as coffee and other foodstuffs is "not based on supply and demand" but based on market speculation. He said that the farmers who actually produce the commodities are receiving a "de minimus" proportion of the price rises.

"Right now we are experiencing a very strange and almost inexplicable phenomenon in the commodities market. Without any real supply or demand issues we are witness to the fact that most agricultural food commodities are at record highs at once, and coffee is at a 34-year high," he said. "Through financial speculation – hedge funds, index funds and other ways to manipulate the market – the commodities market is in a very unfortunate position. This has resulted in every coffee company having to pay extraordinarily high prices for coffee."