Tuesday, March 07, 2023

War Profiteering

  The Financial Times reported Sunday that the commodity trading industry "made record gross profits of more than $115 billion from trading activities last year."

That total is up 60% compared to 2021, with the independent trading houses Trafigura, Vitol, and Glencore among the biggest beneficiaries, the Financial Times noted.

As much of the world reeled from high energy and food prices that left millions struggling to heat their homes and feed their families, commodity trading firms that benefit from extreme market volatility brought in record-breaking profits in 2022, capitalizing on chaos spurred by Russia's invasion of Ukraine.

"Financial players such as hedge funds also enjoyed big gains, earning an estimated $12 billion from trading activities in 2022 compared with less than $3 billion the year before," the newspaper added.

Ernst Frankl, a partner at Oliver Wyman and one of the report's authors, told the Financial Times that 2022 "was a bit of a perfect storm across all the commodities, from a trading opportunity perspective."

"Volatility is the lifeblood of what traders need in order to trade," Frankl said.

Experts have argued that commodity speculators are not only benefiting from extreme market volatility—they're to some degree causing major price swings that have real-world consequences.

"We're in a market where speculators are driving prices up," Michael Greenberger, former head of the Division of Trading and Markets at the U.S. Commodity Futures Trading Commission, told Mongabay last year.

World Food Program (WFP) projects that more than 345 million people will be "food insecure" this year, more than double the 2020 number.

Amid Global Hunger Crisis, Commodity Speculators Reap Record-Shattering Profits (commondreams.org)

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