Thursday, July 8, 2010

Chinese Government Intends to Halt Manipulation in the Mung Bean Market

Shades of last November's corner in the garlic market:
Commodities: "Is China preparing for a vampire attack?"
How the heck did I miss this trade?...
...We’ll get right to the point: garlic has outperformed gold and stocks in China becoming the country’s best performing asset this year, according to a Reuters report.
And no, the trigger has not been a sudden fear of vampire squids in China, but the idea the bulb could be used to ward off H1N1 flu, according to Morgan Stanley economists cited by the news wire.
Bear with us because the story does get weirder....
Now Xinhua reports:
...Speculation has been blamed for the greatly increased prices of some agricultural products in China this past May.
The price of mung beans, for example, soared, from nine yuan (1.32 U.S. dollars) per kilogram in October in 2009 to 20 yuan by May.
Xu said the Jilin Corn Center Exchange Ltd. has been fined 1 million yuan (147,000 U.S. dollars) for market manipulation....
DNA India has additional details:

...Xu Kunlin, chief of the price department at the country’s top economic planning body, the National Development and Reform Commission (NDRC), alleged that moong bean prices soared since Jilin Corn Center Wholesale Market Co told an industry conference last October that production levels had fallen sharply.

The price manipulation was also facilitated by an unlikely scamster: a self-styled high-profile nutritionistnamed Zhang Wuben, who wrote a best-selling book recommending the bean could cure all kinds of diseases, from hypertension to diabetes.
Last month, Zhang was unmasked as an impersonator who had faked his medical credentials; his temple-styled clinic, where he offered high-priced appointments — which were fully booked until 2012 — was demolished.
Zhang had branded himself as hailing from an “aristocratic” family of traditional Chinese medical practitioners; he had claimed that his father had served as the private doctor of a senior central Communist Party official. In fact, Zhang was revealed as a 47-year-old laid-off worker in a textile factory; the nearest he came to practising medicine was that he gave massages.

In November 2009, Zhang launched his book Cure the Diseases You Get from Eating by Eating, a simplistic ‘food therapy’ manual that argued that “the best curative effect can be achieved by persistent food therapy”. Among his top ‘food therapy recommendations’ were moong bean, eggplant, radish, and white gourd. The book, and an accompanying DVD, went on to sell 3 million copies. A 10-minute consultation, fully booked until 2012, cost 300 yuan; but impatient patients who were unwilling to wait could pay up 5,000 yuan for an ‘emergency’ session.

In response to this two-track scam artistry, moong bean prices soard from 9 yuan a kg in October to nearly four times as much in May. It also stoked food inflation, leading consumer price inflation to overshoot the government target of 3% in May....