Lawmakers blame commods price surge on speculators

By Ayesha Rascoe

WASHINGTON, May 20 (Reuters) - Lawmakers and farm groups who blame hedge funds and other speculative investors for record food and energy prices raised doubts on Tuesday about the U.S. futures market regulator's claim that other factors are responsible.

The Commodity Futures Trading Commission blames surging prices of commodities such as oil, corn and soybeans on the decline of the U.S. dollar, strong demand from emerging economies, and geo-political events.

CFTC Chief Economist Jeffrey Harris said there was little data to link institutional investors and price changes. He noted that prices also have surged to record levels for commodities such as durum wheat and hay that do not have futures contracts.

"I would focus on broad economic policy, rather than look at individual behavior," he said at a congressional hearing.

Senator Carl Levin, a Michigan Democrat, disputed that assessment, saying the agency has ignored the tremendous growth of institutional investors in futures markets and the role that plays in price increases. Levin chastised the CFTC for its lack of action against speculators.

"You monitor, you update, you study, and then you don't do a darn thing about it," Levin said.

This year's sharp runup in commodities prices has sparked more debate about whether the increase is primarily due to market fundamentals or fund managers.

Farming groups and food producers blame speculative trading from investment funds for making markets more volatile, undermining the ability of futures markets to determine price and help them manage risk.