Commodity Cartels

Commodity Cartels
The Concept:  Operate free-market trading having guaranteed clearing mechanisms within a cartel structure.
Industrialized nations consistently produce reliable quality and quantities of agricultural commodities and processed food stuffs. These food stuff producer nations should form the Organization of Metal & Agricultural Producing nations. This cartel could operate as an oligopoly commensurate with OPEC. It would meet OPEC on its level. It would establish and operate free markets within this cartel duality. Separate free markets will operate trading mechanisms via formal exchange platforms in order to price-discover and trade. This new cartel will provide agricultural and metal commodities in exchange for OPEC oil.  Varieties of oil are relatively fungible compared to other commodities.
Inflation Dampening:
New record high prices are being set for most commodities: Oil, Agricultural, Metals. This would normally lead to inflation even after intermediate-term consumer price resistance. However, since much of the volume of most commodities will be traded directly to the consuming nations dynamically in a just-in-time mode, their relative valuations will fluctuate and over time ameliorate inflation.
Since US wheat may be traded for Saudi oil, following dynamic price discovery on both side of the trade, demand and supply will force stability of production and hold prices firm relative to each other. When the US needs oil, it can enter the cartel’s market system, place a bid for oil with the payment to be made in wheat. Both oil and wheat will be related based upon the dollar value of each and the dollar’s spot valuation.
Macro Globalization:
—   Introduction of these two matched cartels competing directly supported by underlying free-market mechanisms is consistent with the breakdown of the nation-state and development of a homogeneous global economy.
—   Oil-rich regions of Africa, Asia, South America, and the Middle East are susceptible to political unrest and civil disobedience. These result in economic disruption and oil flow outages. Cartel arrangement carries macro oversight. That is, presumably cartel management is educated and economically-savvy enough to ensure that its commitments are delivered by all its members. If a member of a cartel reneges on a trade, the cartel can use its oversight powers to consummate the trade using another member’s resources. Therefore the dual cartel arrangement — Oil & Commodities — should allow for increased global trade stability.
—   The use of macro cartels serves to ameliorate potentially disruptive powers of national and regional demagogues and dictators. These tyrants will have their power to damage held to local levels.
The Oil-Agricultural-and-Metal commodity equation is being changed by the diversion of raw product supplies from food stuffs toward ethanol production. This is an evolving problem regardless of any improved trading mechanisms which could be established. Shortages of agricultural supplies eligible for export from several nations may be declining since those supplies start with farmers’ crop choice shifts and flow vertically through the agricultural process.

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