Summit Notebook

Terry Duffy, the chairman of CME Group, which owns the world’s largest derivatives exchange, says he realizes the Merc can be an easy scapegoat at a time when food prices are soaring. When politicians start to talk about the evils of “speculators”, criticism of the main venue where they make their bets on wheat and other crops can’t be far behind.

But Duffy, a long-time livestock futures trader, told the Reuters Exchanges and Trading Summit that he’s used to the exchange being a “political football” and that this is far from the worst case of that happening.

“I remember seeing tractors on LaSalle Street,” which runs through the heart of Chicago’s financial district, when farmers were protesting against excessively low prices in other years, he says. ”I mean, that’s a bad day. That’s when you know people are upset because that gets everybody’s attention.”

The mistake, Duffy says, is to say that the speculator, or the hedge fund, are the root of the problem of the run-up in food prices.  Investors want exposure to agricultural commodities and they are intent on getting it, whether through the CME or elsewhere, he says.