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Who is in charge of regulating the wheat futures market? That agency is the Commodity Futures Trading Commission (CFTC) which oversees trading in the futures markets. One area of regulation is the number of open contracts any one person can have at any given time. The limit is 6,500 contracts.
So then what caused the price of wheat to go wild last year? It seems that the CFTC was complicit in that they gave exemptions for traders to go beyond the 6,500 limit. One trader was allowed to hold 53,000 contracts. Then to make matters worse, six traders ganged up and held 130,000 contracts. According to Bill Tomson, the value of these investments jumped "from an estimated $15 billion dollars in 2003 to around $200 billion by mid 2008.
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