often considerable agricultural price risk they face. Ministers believe that improved transparency and data availability is important to inform policy making in this area and to help regulators police markets effectively. The Government strongly supports initiatives to improve commodity derivatives and is working with European and international partners to achieve this.

It is also important to note that trading in commodities markets plays an important role in providing liquidity (the volume of trades being made in a market) in these markets and that liquidity is essential to the effective functioning of these markets. Against the backdrop of climate change, and the possibility that agricultural prices may become more volatile over time, the role of agricultural futures and options markets, and the liquidity they rely on, become more important.

Before any regulations are introduced it is important that there is a clear understanding of the associated costs and benefits. Ministers have therefore said they would need to see a more detailed proposal from the United Nations Conference on Trade and Development before they could comment.

It is very difficult to be definitive about the role of speculation in price spikes, but I do hope this reassures you that Ministers will continue to look at the research around this issue.  

As requested, I will be pleased to write on your behalf to the minister responsible at HM Treasury, asking for his comments in response to the points you have raised.  As soon as I have received a reply, I will be in touch with you again.