DOCSLIB.ORG

An Ethnography of Making Markets in Chicago a DISSERTATION

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
An Ethnography of Making Markets in Chicago a DISSERTATION NORTHWESTERN UNIVERSITY Working at Risk: An Ethnography of Making Markets in Chicago A DISSERTATION SUBMITTED TO THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS for the degree DOCTOR OF PHILOSOPHY Field of Anthropology By Gail E. Eby EVANSTON, ILLINOIS JUNE 2008 2 © Copyright by Gail E. Eby 2008 All Rights Reserved 3 ABSTRACT Working at Risk: An ethnography of making markets in Chicago Gail E. Eby This dissertation examines the role of market makers in making markets for options and futures on Chicago’s derivatives exchanges. Recent institutional and technological changes in the ways that financial products are traded have given rise to the possibility of markets without market makers, raising the question of how these developments alter the relationships between market participants, and the effects of those alterations. This dissertation draws upon ethnographic fieldwork with a group of market makers in options and in futures trading across Chicago’s derivatives exchanges. The research methods include interviews and participant observation, as well as gathering secondary data. I address first changes in the institutional setting of trade, drawing out the historical context of the acquisition of the Chicago Board of Trade by the Chicago Mercantile Exchange, looking at how the market itself is made. I then turn to the ways in which market makers experience their participation in their markets, and find that they confront four principal challenges. The first challenge is that of maintaining behavioral standards within a market. The second challenge is that of mastering the skills required to manage risk. The third challenge is that of self-management. The final challenge is that of changing technology, whether on the trading floor or in an electronic system. I found 4 that markets do not arise effortlessly, but are instead the outcome of a process of ongoing effort, negotiation and re-negotiation on the part of participants. 5 ACKNOWLEDGMENTS This dissertation has benefitted from the support and generosity of many people. I was fortunate to have an outstanding committee. Timothy Earle has been a wise and generous intellectual guide and mentor over two continents, two universities, two centuries, and over projects spanning the Neolithic to the present day. It seems appropriate that our final project together is one that looks toward the financial future. Helen Schwartzman has shared generously of her experience and insights, and kept both me and the project grounded and focused, seeing possibilities even when I did not. Robert Launay’s work on traders without trade helped me to understand the world of traders with trade; he also reminded me that anthropology should be serious, but it should also be fun. Northwestern has been a stimulating and collegial place to be a graduate student, due in no small part to the leadership of Bill Leonard; I owe him my thanks as well. At UCLA, my thinking about money and markets was shaped and sharpened by conversations with Jean-Laurent Rosenthal and with Stephen Munzer. At Northwestern, this project had its genesis in a class taught by Annelise Riles; I thank her and Hiro Miyazaki for introducing me to new ways of thinking about anthropology and financial markets. Thank you to Chris and Gwynne Attarian, Rob Beck, Maria Bidelman, Douglas Bolender, Marian Caudron, Beth Fulkerson, Patricia Hamlen, Kristina Kelertas, Josh 6 Kellman, Elise Levin, Anne Lovelace, Belinda Monahan, Karen Poulson, and Kara Reichart for your friendship. In the course of this project, I benefitted from the surgical skills of Dr. Edwin Kaplan and Dr. Ivan Ciric; I cannot thank them enough for their roles in making this work possible. My family has been extraordinarily supportive, emotionally and financially, throughout this rather lengthy process; this is as much their achievement as it is mine. I also benefitted from University Fellowships I received from Northwestern University. Finally, none of this would have been possible without the extraordinary participants. I owe you all an enormous debt of gratitude for introducing me to your craft, and for sharing your time and skills and wisdom and experience. I learned more from you than I could ever fit in a single dissertation, and I hope that this work has captured a small part of the reality of your lives and work. 7 For Jocelyn, Charles and William, with love 8 TABLE OF CONTENTS ABSTRACT ........................................................................................................................ 3 ACKNOWLEDGMENTS ................................................................................................... 5 CHAPTER 1: INTRODUCTION: WORKING AT RISK .................................................. 9 CHAPTER 2: EVENTFUL EXCHANGES ...................................................................... 39 CHAPTER 3: THE PRODUCTION OF VIRTUE ............................................................ 72 CHAPTER 4: LES JEUX SONT FAITS ....................................................................... 102 CHAPTER 5: DISCIPLINE AND PROSPER ................................................................ 137 CHAPTER 6: LIQUID MARKETS ............................................................................... 169 CHAPTER 7: CONCLUSION: FUTURES AND OPTIONS ....................................... 204 BIBLIOGRAPHY ........................................................................................................... 212 9 Chapter 1: Introduction: Working at Risk A central trope of the recent Western past has been the idea that markets work. Markets are commonly portrayed as natural, positive and powerful, as occurring inevitably wherever the fetters thought to constrain them are removed. If humans could be said to have a natural state, this line goes, it would be the Smithian propensity to truck and barter. This project arose in response to this trope of effortless, natural markets. The project sought to answer several questions: “How do markets work?” “How do they arise?” and “How are they maintained?” This project is far from the first to ask these questions and others like them, but they were asked of a setting that is relatively novel for anthropologists, the heart of contemporary finance, the derivatives markets of Chicago. There the questions were asked of some of the people most qualified to answer them, the actors who bring markets into being and maintain them, the category of economic actor known as market makers. The research was carried out at a critical period in the history of the exchanges in Chicago, between 2001 and 2003, with traders who made markets in both futures and options (and options on futures) in a range of markets across all of Chicago’s derivatives exchanges. This dissertation is an account of the ways in which those traders participated in making the markets that they traded, the challenges that they faced and the lessons that they learned, and imparted in turn, about the sum of their experience in how participants shape and are shaped by the economic action. 10 The global market This research was conducted across four contexts – the global derivatives market, the city of Chicago, the exchange trading floors of the city, and among market makers. The first of these contexts is the global market for derivatives. Most broadly, derivatives are financial instruments that change in value in relation to price movements in an underlying instrument (such as a stock). They derive their value from the underlying product, ergo the term derivative. In practice, the majority of derivatives traded on exchanges are futures contracts and options contracts. A futures contract is an agreement between two parties, a buyer and a seller, to exchange a particular good for a particular price at a particular date in the future (ergo “futures”). An options contract is similar to a futures contract except that the buyer pays to buy the contract, and has the right, but not the obligation, to take delivery. The buyer has the option to use the contract, but not the obligation (ergo “options”). The global market for derivatives is enormous and growing. In 1997, the value of traded derivatives was a staggering $360 trillion (Levin 2004:1) In 1998, the average daily turnover in the foreign exchange derivatives market was $1.5 trillion (Knorr Cetina and Bruegger 2002:906). In 1999, the notational value of derivatives traded in Chicago alone was $217 trillion; for comparison, the notional value of contracts traded on the New York Stock Exchange in the same period was $7 trillion (Bass 1999:13). MacKenzie and Millo report that “By June 2000, the total notational amount of 11 derivatives contracts outstanding worldwide was $108 trillion, the equivalent of $18,000 for every human being on earth” (MacKenzie and Millo 2003:109). Notational value of contracts tells part of the story; the other part of the story is the volume of contracts, which is the primary venue in which exchanges compete. As of May 2007, the volume of contracts traded on all exchanges worldwide reached 5.8 billion (Burns 2007:10-13). The leading exchange between January and May 2007 was the Korea Exchange, with 1,155.15 million contracts traded (up 1.38% from the year before), and the second largest the Frankfurt-based Eurex, with 774.28 million contracts (Burns 2007:10-13). The Chicago Mercantile Exchange was third with 650.75 million contracts (up 19.57%), the Chicago Board of Trade fourth with 393.38 million contracts (up 19.21%) and the Chicago Board Options Exchange was
Load more

Recommended publications
  • Chicago Boad of Trade
    Introduction to Hedging FutureYour of Control Taking Workbook with Futures and Options Producer Series 1 Introduction to Hedging with Futures and Options Gives a complete description of the advantages of using futures and options. Producer work sheets and a glossary of most commonly used futures and options terms are included. 2 Strategies for Selling Crops with Options Provides advanced selling strategies for producers using the options markets. Prerequisite: A basic understanding of hedging with futures and options. Taking Control of Your Future Farming the land is a lifestyle as much a certain amount of money invested in as a job, a tradition passed on from seed, fertilizer, equipment, and labor, generation to generation. There are he runs the risk of a selling price that things about farming you can control, is too low to cover those costs and like what crops you grow, whether or make a profit. The good news is that not you raise livestock, or when you price risks such as these can be buy inputs or sell whatever it is you’re successfully managed by the producer. producing. But there are many things Managing Price Risk you cannot control, things like mother Pricing opportunities, times to take nature, world events, or supply and advantage of profitable crop prices, demand for crops or livestock. “What the Chicago Board of can occur several times during a year. Trade allows you to do with The events and situations you may not By knowing what your operation futures and options is be have an influence over can have a dev- needs to make a profit, you can take flexible and let someone else astating effect on your operation.
    [Show full text]
  • Chicago Board Options Exchange Annual Report 2001
    01 Chicago Board Options Exchange Annual Report 2001 cv2 CBOE ‘01 01010101010101010 01010101010101010 01010101010101010 01010101010101010 01010101010101010 CBOE is the largest and 01010101010101010most successful options 01010101010101010marketplace in the world. 01010101010101010 01010101010101010 01010101010101010 01010101010101010 01010101010101010 01010101010101010ifc1 CBOE ‘01 ONE HAS OPPORTUNITIES The NUMBER ONE Options Exchange provides customers with a wide selection of products to achieve their unique investment goals. ONE HAS RESPONSIBILITIES The NUMBER ONE Options Exchange is responsible for representing the interests of its members and customers. Whether testifying before Congress, commenting on proposed legislation or working with the Securities and Exchange Commission on finalizing regulations, the CBOE weighs in on behalf of options users everywhere. As an advocate for informed investing, CBOE offers a wide array of educational vehicles, all targeted at educating investors about the use of options as an effective risk management tool. ONE HAS RESOURCES The NUMBER ONE Options Exchange offers a wide variety of resources beginning with a large community of traders who are the most experienced, highly-skilled, well-capitalized liquidity providers in the options arena. In addition, CBOE has a unique, sophisticated hybrid trading floor that facilitates efficient trading. 01 CBOE ‘01 2 CBOE ‘01 “ TO BE THE LEADING MARKETPLACE FOR FINANCIAL DERIVATIVE PRODUCTS, WITH FAIR AND EFFICIENT MARKETS CHARACTERIZED BY DEPTH, LIQUIDITY AND BEST EXECUTION OF PARTICIPANT ORDERS.” CBOE MISSION LETTER FROM THE OFFICE OF THE CHAIRMAN Unprecedented challenges and a need for strategic agility characterized a positive but demanding year in the overall options marketplace. The Chicago Board Options Exchange ® (CBOE®) enjoyed a record-breaking fiscal year, with a 2.2% growth in contracts traded when compared to Fiscal Year 2000, also a record-breaker.
    [Show full text]
  • Food Speculationspeculation Ploughing Through the Meanders in Food Speculation
    PloughingPloughing throughthrough thethe meandersmeanders inin FoodFood SpeculationSpeculation Ploughing through the meanders in Food Speculation Collaborator Process by Place and date of writing: Bilbao, February 2011. Written by Mónica Vargas y Olivier Chantry from the (ODG) Observatori del Deute en la Globalització (Observatory on Debt in Globalization) of the Càtedra UNESCO de Sostenibilitat Universitat Politècnica de Catalunya (Po- lytechnic University of Catalonia’s UNESCO Chair on Sustainability) and edi- ted by Gustavo Duch from Revista Soberanía Alimentaria, Biodiversidad y Culturas (Food Sovereignty, Biodiversity and Cultures Magazine). With the support of Grain www.grain.org and of Mundubat www.mundubat.org This material may be freely shared, although we would appreciate your quoting the source. Co-financed by: “This publication has been produced with the financial support of the Spanish Agency for International Co-operation for Development (AECID). The contents of this publica- tion are the exclusive responsibility of Mundubat and do not necessarily reflect the opinion of the AECID.” Index Introduction 5 1. Food speculation: what is it and where does it originate from? 8 Initial definitions 8 Origin and functioning of futures markets 9 In the 1930’s: a regulation that legitimized speculation 12 2. The scaffolding of 21st-century food speculation 13 Liberalization of financial and agricultural markets: two parallel processes 13 Fertilizing the ground for speculation 14 Ever more complex financial engineering 15 3. Agribusiness’
    [Show full text]
  • Private Ordering at the World's First Futures Exchange
    Michigan Law Review Volume 98 Issue 8 1999 Private Ordering at the World's First Futures Exchange Mark D. West University of Michigan Law School Follow this and additional works at: https://repository.law.umich.edu/mlr Part of the Contracts Commons, Law and Economics Commons, Legal History Commons, and the Securities Law Commons Recommended Citation Mark D. West, Private Ordering at the World's First Futures Exchange, 98 MICH. L. REV. 2574 (2000). Available at: https://repository.law.umich.edu/mlr/vol98/iss8/8 This Symposium is brought to you for free and open access by the Michigan Law Review at University of Michigan Law School Scholarship Repository. It has been accepted for inclusion in Michigan Law Review by an authorized editor of University of Michigan Law School Scholarship Repository. For more information, please contact [email protected]. PRIVATE ORDERING AT THE WORLD'S FIRST FUTURES EXCHANGE Mark D. West* INTRODUCTION Modern derivative securities - financial instruments whose value is linked to or "derived" from some other asset - are often sophisti­ cated, complex, and subject to a variety of rules and regulations. The same is true of the derivative instruments traded at the world's first organized futures exchange, the Dojima Rice Exchange in Osaka, Japan, where trade flourished for nearly 300 years, from the late sev­ enteenth century until shortly before World War II. This Article analyzes Dojima's organization, efficiency, and amalgam of legal and extralegal rules. In doing so, it contributes to a growing body of litera­ ture on commercial self-regulation1 while shedding new light on three areas of legal and economic theory.
    [Show full text]
  • The Evolution of European Traded Gas Hubs
    December 2015 The evolution of European traded gas hubs OIES PAPER: NG 104 Patrick Heather The contents of this paper are the authors’ sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its members. Copyright © 2015 Oxford Institute for Energy Studies (Registered Charity, No. 286084) This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies. ISBN 978-1-78467-046-7 i December 2015: The evolution of European traded gas hubs Preface In following the process of the transition of continental European gas pricing over the past decade, research papers published by the OIES Gas Programme have increasingly observed that the move from oil-indexed to hub or market pricing is a clear secular trend, strongest in northwest Europe but spreading southwards and eastwards. Certainly at an overview level, such a statement appears to be supported by the measurable levels of trading volumes and liquidity. The annual surveys on pricing of wholesale gas undertaken by the IGU also lend quantitative evidence of these trends. So if gas hub development dynamics in Europe are analogous to ‘ripples in a pond’ spreading outwards from the UK and Dutch ‘epicentre’, what evidence do we have that national markets and planned or nascent hubs at the periphery are responding? This is more than an academic question.
    [Show full text]
  • Market Information – Glossary of Terms Centrifuge. a Perforated
    Market Information – Glossary of Terms Centrifuge. A perforated appliance which spins inside a casing to separate sugar crystals from molasses. Sugar that has come through a centrifuge is centrifugal sugar. Chicago Board of Trade (CBOT). Established in 1848, it is the oldest financial futures and options exchange in the world and situated in Chicago, Illinois. In 2007, the Chicago Board of Trade merged with the Chicago Mercantile Exchange to form the CME Group. Some its commodity futures prices (such as wheat, soya beans and maize) form the principal world price benchmarks. Contract expiry. The date at which trading a particular futures contract ends and becomes either physically or cash settled. For the New York No. 11 raw sugar contract this is the last trading day of the month prior to the delivery month. For the London No. 5 white sugar contract it is sixteen calendar days before the first day of the delivery month. Free on Board (FOB). A term requiring the seller to deliver goods on board a vessel designated by the buyer. The seller fulfils their obligation to deliver when the goods have passed over the ship's rail. Generally, a seller has an obligation to deliver goods, and assume the costs of delivery to a named place for transfer to a carrier, such as a ship. EU sugar regime. In 2006 a major reform achieved simplification and greater market orientation of the EU's sugar policy. The total EU production quota of 13.5 million tonnes of sugar is divided between nineteen Member States, of which the UK’s share is 1.056mt.
    [Show full text]
  • The Dynamics of Commodity Spot and Future Markets
    The Dynamics of Commodity Spot and Futures Markets: A Primer Robert S. pindyck* I discuss the short-run dynamics of commodity prices, production, and inventories, as well as the sources and effects of market volatility. I explain how prices, rates of production, ana’ inventory levels are interrelated, and are determined via equilibrium in two interconnected markets: a cash market for spot purchases and sales of the commodity, and a market for storage. I show how equilibrium in these markets affects and is affected by changes in the level qf price volatility. I also explain the role and behavior of commodity futures markets, and the relationship between spot prices, futures prices, and inventoql behavior. I illustrate these ideas with data for the petroleum complex - crude oil, heating oil, and gasoline - over the past two decades. INTRODUCTION The markets for oil products, natural gas, and many other commodities are characterized by high levels of volatility. Prices and inventory levels fluctuate considerably from week to week, in part predictably (e.g., due to seasonal shifts in demand) and in part unpredictably. Furthermore, levels of volatility themselves vary over time. This paper discusses the short-run dynamics of commodity prices, production, and inventories, as well as the sources and effects of market volatility. I explain how prices, rates of production, and inventory levels are interrelated, and are determined via equilibrium in two interconnected markets: a cash market for spot purchases and sales of the commodity, and a market for storage. I also explain how equilibrium in these markets affects and is affected by changes in the level of price volatility.
    [Show full text]
  • Utility Markets
    Sustainable finance Gordon Bennett Managing Director, Utility Markets CFTC’s Energy and Environmental Markets Advisory Committee June 3, 2021 ICE ESG Solutions With ESG solutions across the investment lifecycle ICE connects people to opportunity to create insights and drive sustainable decision- making. Our track record of creating sustainable products and solutions 2000 2004 2008 2010 2013 2014 2019 2020 ICE formed from ICE and the Climate ICE platform lists swaps ICE expands reach in NYSE lists the only ICE Futures Europe AUM in sustainable ICE Data Services expands its predecessor company, Exchange launch the contracts based on emissions markets with publicly traded green begins conducting ETFs listed on the NYSE range of ESG indices with the Continental Power Chicago Climate Regional Greenhouse the acquisition of REIT, Hannon Armstrong European Union surpasses $5 billion. launch of ICE Global Carbon Exchange (CPEX), Futures Exchange Gas Initiative (RGGI) Climate Exchange and (NYSE: HASI). Aviation Allowances Futures Index, Corporate ESG which was acquired in (CCFE), listing allowances becomes global leader auctions on behalf of ICE Futures U.S. Indices and the Global 1997 to build an futures contracts for in carbon futures and ICE Futures Europe the U.K. Government. launches the first suite of Government Carbon Reduction electronic, transparent carbon offsets. options markets. begins conducting Phase ESG derivatives based Indices energy marketplace III EUA auctions on behalf on MSCI indices. of the U.K. Government. ICE Climate Risk launches ICE ESG Reference Data launches 2003 2005 2009 2012 2014 2015 2019 2020 ICE and the Climate ICE Futures Europe lists ICE launches ICE Futures U.S.
    [Show full text]
  • The Advent of the Chicago Board Options Exchange a Golden Anniversary Memoir by Its Founding President
    THE ADVENT OF THE CHICAGO BOARD OPTIONS EXCHANGE A GOLDEN ANNIVERSARY MEMOIR BY ITS FOUNDING PRESIDENT By Joe Sullivan April 26, 1973, was a momentous day in the history of the world’s financial markets. It marked the opening day of trading on the Chicago Board Options Exchange and with it the advent of what was probably the most important stock market innovation of the 20th Century. For those of us who had assembled for the opening ceremony, it was anything but clear what the CBOE’s destiny would be. The ceremony took place in what until a few months prior had been a musty smoking room adjoining the Chicago Board of Trade’s huge commodity futures trading floor. But now the room was rimmed by eight booth- like trading posts topped by big CRT screens that would display the prices of financial instruments the likes of which the world had never seen before. The governor of Illinois Dan Walker and the chairman of the Securities and Exchange Commission Brad Cook were on hand for the occasion and lent it stature. But Walker later landed in prison while Cook soon resigned his post in disgrace. No one could say for sure that the CBOE wouldn’t face a similar fate. For my own part, I was mainly just elated that this day had finally come. As a former journalist with little background for the role until I stepped into it, I’d devoted more than four years to spearheading what at times had seemed like a windmill tilting exercise. How I came to be part of this effort, how it came to fruition and how it achieved almost instant success are what this memoir is all about.
    [Show full text]
  • INTRODUCTION to COTTON FUTURES Blake K
    INTRODUCTION TO COTTON FUTURES Blake K. Bennett Extension Economist/Management Texas Cooperative Extension, The Texas A&M University System Introduction For well over a century, industry representatives have joined traders and investors in the New York Board of Trade futures markets to engage in price discovery, price risk transfer and price distribution of cotton. In fact, the first cotton futures market contracts were traded in New York in 1870. From that time, the cotton futures market has grown in use, but still provides the same services it did when trading began. For the novice, futures market trading may seem chaotic. However there is a reason for every movement, gesture, and even the color of jacket the traders wear on the trading floor. All these elements come together to provide the world a centralized location where demand and supply forces are taken into consideration and market prices are determined for commodities. Having the ability to take advantage of futures market contracts as a means of shifting price risk is a valuable tool for producers. While trading futures market contracts may be a relatively easy task to undertake, understanding the fundamental concept behind how these contracts are used from a price risk management standpoint is essential before trading begins. This booklet will assist cotton producers interested in gaining or furthering their knowledge in terms of using futures contracts to hedge cotton price risk. Who Are The Market Participants? Any one person, group of persons, or firm can trade futures contracts. Generally futures market participants fall into two categories. These categories are hedgers and speculators.
    [Show full text]
  • The Commodity Exchange Monopoly – Reform Is Needed
    Florida International University College of Law eCollections Faculty Publications Faculty Scholarship 1991 The Commodity Exchange Monopoly – Reform is Needed Jerry W. Markham Florida International University College of Law Follow this and additional works at: https://ecollections.law.fiu.edu/faculty_publications Part of the Banking and Finance Law Commons Recommended Citation Jerry W. Markham, The Commodity Exchange Monopoly--Reform is Needed, 48 Wash. & Lee L. Rev. 977, 1036 (1991). This Article is brought to you for free and open access by the Faculty Scholarship at eCollections. It has been accepted for inclusion in Faculty Publications by an authorized administrator of eCollections. For more information, please contact [email protected]. +(,121/,1( Citation: Jerry W. Markham, The Commodity Exchange Monopoly--Reform is Needed, 48 Wash. & Lee L. Rev. 977 (1991) Provided by: FIU College of Law Content downloaded/printed from HeinOnline Mon Aug 27 16:09:42 2018 -- Your use of this HeinOnline PDF indicates your acceptance of HeinOnline's Terms and Conditions of the license agreement available at https://heinonline.org/HOL/License -- The search text of this PDF is generated from uncorrected OCR text. -- To obtain permission to use this article beyond the scope of your HeinOnline license, please use: Copyright Information Use QR Code reader to send PDF to your smartphone or tablet device THE COMMODITY EXCHANGE MONOPOLY-REFORM IS NEEDED JERRY W. MARKHAM* INTRODUCTION In theory, the commodity futures markets are the essence of competi- tion.' All orders are required to be exposed to trading pits where traders vie competitively and aggressively to assure the best possible execution price.
    [Show full text]
  • Cereal Secrets: the World's Largest Grain Traders and Global Agriculture
    OXFAM RESEARCH REPORTS AUGUST 2012 CEREAL SECRETS The world's largest grain traders and global agriculture MS. SOPHIA MURPHY INDEPENDENT CONSULTANT AND SENIOR ADVISOR AT THE INSTITUTE FOR AGRICULTURE AND TRADE POLICY DR. DAVID BURCH HONORARY PROFESSOR SOCIOLOGY, THE UNIVERSITY OF QUEENSLAND DR. JENNIFER CLAPP PROFESSOR, ENVIRONMENT AND RESOURCE STUDIES AND INTERNATIONAL AFFAIRS, UNIVERSITY OF WATERLOO The four big commodity traders – Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus, collectively referred to as ‘the ABCD companies’ – are dominant traders of grain globally and central to the modern agri-food system. This report considers the ABCDs in relation to several global issues pressing on agriculture: the ‘financialization’ of both commodity trade and agricultural production; the emergence of global competitors to the ABCDs, in particular from Asia; and some of the implications of large-scale industrial biofuels, a sector in which the ABCDs are closely involved. The report includes a discussion of how smallholders in developing countries are affected by these changes, and highlights some development policy implications, given the importance of the ABCD firms in shaping the world of food and agriculture. The report highlights the ways in which these four firms are decisive actors in the global restructuring of the overlapping food, feed, and fuel complexes that is now under way, and considers how the firms are evolving as they respond to and shape the new pressures and opportunities in the modern agri-food system. Oxfam Research Reports are written to share research results, to contribute to public debate and to invite feedback on development and humanitarian policy and practice.
    [Show full text]