A couple of weeks ago I read that Water has started to be traded at Wall Street and according to Yahoo Finance, water is at the same wavelength of other scarce goods, such as oil and gold.
Water shortages are a clear message from decades with Africa, Asia and South America among the World’s poorest area when it comes to water.
Water Price Index has been added to the Nasdaq with the NQH2O ticker and it will be related to the California Water Price where water shortages has shown first signals.
Water, Gold, Oil, Wheat, Corn and so on, are derivatives that at the very beginning were meant as a speculative hedging, like for agricultural products, futures are used as a coverage against eventual price drop of the products.
Water will be soon something institutional can speculate on. I say soon, since I am not sure about market volumes as of today.
Should we concern about this news or not?
Well, there may be conspiracy theories or other calling for the big manipulation. Actually, corn and other commodities are listed at CME and Wall Street since decades and besides some small speculations in some historical moments, nothing huge has never happened.
I can expect the same thing on Water, but Water should be a public good, while Corn and other commodities are not. Water comes from nature in abundance. Cereals are cultivated and the Future have a precise purpose. For example for the Spread Trading and hedging the price.
Privatization of Water. Have you never heard about?
What if Water speculation would lead to a price increase of the good, and a more difficult purchase of it? Or are we just looking at another “negative price for oil” disinformation bubble, like the one in march-april 2020?
Water Index price will have an influence on cereals and also oil, coffee and other commodities related to water.
I think that it is too early to create panic on this topic, but I let this article with a lot of open questions, since I hope to gather different ideas (without being influenced to much from my point of view).
Leave a comment and lit the debate!