The price of sugar has reached its highest peak in 30 years, thanks to “parasitic” computer traders whose micro-fraction buying and selling has manipulated the cost of the commodity.

 

Fed up with the situation, the World Sugar Committee lashed out at high-frequency traders, saying their intention only is “to enrich themselves” at the expense of others.

 

Using powerful computers and complex algorithms, the controversial traders conduct market transactions in a fraction of a second and exploit minute price discrepancies. The high-tech trading can be lucrative, but at the expense of traditional commodity traders, as well as consumers buying sugar.

 

Before the advent of high-frequency trading, the price of sugar rarely fluctuated. A decade ago it took the sugar market six months to move two cents. But in the past three months alone, it shifted two cents in just one day—on five occasions. Last week, it moved this much in a single second.

 

Some politicians have called for tighter regulation of commodity trading, including France’s president, Nicolas Sarkozy, who has made agricultural commodities regulation a key matter before the Group of 20.

-Noel Brinkerhoff

 

Sugar Body Denounces ‘Parasitic’ Traders (by Javier Blas, Financial Times)

High-Speed Trading Blamed for Sugar Rises (by Javier Blas, Financial Times)

Stock Market Taken over by Computers (by Noel Brinkerhoff, AllGov)

Federal Government Asks for Closed Courtroom to Protect Goldman Sachs Secrets (by Noel Brinkerhoff and David Wallechinsky, AllGov)

How Goldman Sachs Made $100 Million a Day in a Flash (by David Wallechinsky, AllGov)