UN say commodities bubbles need intervention

Direct government intervention may be needed to burst bubbles in commodity markets inflated by a new herd of financial investors, a UN study found. Excessive speculation has added around 20% to international oil prices, sending false signals to policy makers, said the report published on Sunday.

Since around 2000, as commodities were perceived to have entered a super-cycle and the equities market bubble burst, oil and other raw materials have lured financial investors, as well as the producers and big consumers historically in these markets.

Business Spectator reports:

“Commodity prices risk being subject to speculative bubbles, (they) move far away from fundamental values and display high volatility,” the report said.