Is Anyone Trading Butter

At the old Chicago Mercantile Exchange, there was a butter contract that was so obscure and thinly traded that they used to make an announcement to gauge whether anyone would like to buy or sell the contract. I thought back on this recently when I read about the explosion of speculative interest in egg futures on the Dalian Futures Exchange. Eggs, Iron Ore, Rebar, and a myriad of other commercial commodities are the newest entrant in the Chinese world of leveraged gambling. We know that the authorities have cracked down on real estate speculation and a few other forms of levered carry, but it would appear that the excess capital sloshing around China (and elsewhere) has found its way into some very unexpected places. The problem with such unfounded speculation in this instance is that the prices determined by said gambling sets prices for a whole host of other ancillary commodities worldwide. One more unintended consequence of the Great Monetary Science Experiment, hereafter known as GMSE.

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