the great nervousness of wheat and oil prices

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To follow oil prices, you really have to hold on. The barrel of Brent was at 110 dollars on March 3, at 130 dollars on March 8 before falling back below the 100 dollar mark on Tuesday March 15.

It is also not easy to understand the reasons for these fluctuations, as the war intensifies in Ukraine and the United States has decided to embargo Russian hydrocarbon imports.

Candidates’ accusations

But for several presidential candidates, an explanation is found for these movements: the world of finance. “There is an enormous responsibility on the part of speculators, oil companies, shareholders, investment funds who are betting on war, betting on the rise in the price of oil”, assured the communist candidate Fabien Roussel, on Radio J, Sunday March 13.

→ THE FACTS. Average fuel price exceeds €2 per liter for the first time

He is not the only one to say this. Marine Le Pen and Jean-Luc Mélenchon make similar comments, but also Michel-Édouard Leclerc, chairman of the E.Leclerc strategic committee. Asked about CNews, Tuesday March 15, the latter warned against “a new wave of speculation and inflation” on “stored agricultural products” in the ports of Odessa and the Black Sea.

Project yourself into the distance

In reality, “the term ‘speculate’ has a pejorative connotation in public opinion, whereas for economists it is a question of anticipating what is going to happen”, stresses Jacques Percebois, director of the Center for Research in Energy Economics and Law (Creden).

“It’s all speculation. The simple fact for a farmer to sell today the wheat harvest he will have in 2023 is a way of speculating on what the prices will be at that time”, explains for his part Philippe Chalmin, professor at Paris-Dauphine University and founder of the Cyclops report, which serves as a reference on the raw materials market.

Ukraine: “Each year, 74% of the wheat produced in the country goes abroad”

Speculation would therefore only be the fixing between two parties of a price agreed in advance for delivery on a given date. A seller will thus try to protect himself against a fall in prices and a buyer, against a possible rise. But as often, excesses disrupt the system.

“After the 2008 crisis, financial players got rid of their real estate assets and turned to wheat and oilseeds, thus helping to drive up prices. The same phenomenon of reversal from one asset class to another could well occur today», believes Thierry Pouch, chief economist of the chambers of agriculture.

A multiplication of the number of speakers

For wheat, exchanges between financial operators have been up to ten times the volume of physical exchanges in recent weeks. Clearly, paper contracts can be bought and resold several times until they expire.

“In times of crisis, with prices that fluctuate a lot as is currently the case, a large part of what is called speculation is in fact only a succession of contracts”, tempers Jacques Percebois. This multiplicity of operators, particularly financial ones, is a “guarantee of efficiency”, notes Philippe Chalmin, and prevents the market from being manipulated by a producer in a position of strength.

→ ANALYSIS. War in Ukraine: the agricultural world faces rising fertilizer prices

“Finance can amplify the movements of a market, but these are first initiated by the balance of power between supply and demand”, says Nathan Cordier, analyst at Agritel. It is easy to understand the soaring prices of wheat, when we know that Russia and Ukraine are the main world exporters. It’s the same thing for oil, when the market was already very tight before the war, for lack of additional capacity that could be quickly available to fuel the economic recovery.

On the markets, the tension is such that the slightest information can make prices vary, in a few hours, upwards or downwards. The sharp drop in the price of a barrel, Monday 14 and Tuesday 15 March, is thus explained by the fear of a slowdown in Chinese growth after the closure of the country’s major cities in the face of the resurgence of the pandemic. China is the world’s largest oil importer.

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Inflation confirmed at 3.6% in February

Inflation accelerated sharply in February in France, to 3.6% over one year, reaching its highest since 2008 due to energy prices, INSEE indicated on Tuesday March 15, confirming its first estimate. Energy prices rose 21.1% year-on-year, with the end of February marked by an acceleration in oil and gas prices with the Russian invasion of Ukraine.

The fear of an embargo, which sent prices soaring, could be seen more clearly in the inflation figures for March. Over one month, inflation in France increased by 0.8%. Excluding volatile energy prices, so-called core inflation rose by 2.5% over one year.

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