Leading nations have come under renewed pressure to curb speculation in agricultural commodities - even as data showed fast money exiting the industry faster than during the 2008 crash.

More than 450 economists from some 40 countries, and at institutions including Berkeley, Cambridge and Oxford universities, urged this week's meeting of finance ministers from the G20 group of leading industrialised countries to "curb excessive speculation" in agriculture futures.

The letter, which blamed speculators for "contributing to increasing volatility and record high food prices", and so "exacerbating global hunger", demand caps on their positions.

"Limits could be set at a level that would maintain sufficient liquidity in the markets while preventing an excessive concentration of purely financial actors," the letter said.

"Clear limits would provide regulatory certainty, promoting stable and sustainable derivatives markets to the benefit of food producers, consumers and broader economic stability."

'Hotly debated issue'

The letter comes the day after the United Nations' food agency, the Food and Agriculture Organisation, warned in an annual flagship report that "food price volatility featuring high prices is likely to continue and possibly increase".

The report said that "increased participation (eg by pension funds) in financial markets that trade commodity index funds might lead to increased volatility" in food prices, but added that "this is a hotly debated issue without a clear consensus".

And it follows a self-imposed exodus by speculators amid fears of a fresh economic downturn, which has driven exposure to futures and options in many food commodities near to historic lows.

Speculators' net long position in Chicago corn, for instance, has dropped to its lowest since July last year, and in sugar to its lowest since early 2009, Rabobank analysis of regulatory data shows.

Managed money, used by many as a proxy for speculators, have turned net short in soymeal for the first time since 2006, and their largest net short in New York cocoa for at least five years.

Worse than 2008 

The extent of the sell-down was more savage even than in 2008, as the world entered its last financial crisis, Australia & New Zealand Bank said.

"Conversely, 2008 was a slow burn. It took three months for the equivalent liquidation in net speculative position.

"The recent liquidation has reset the ag speculative position back to the start of the 2010 ag bull market."

'Upside potential'

However, he highlighted that, this time, agricultural commodity prices had held up relatively well, staying above 12-month lows – and were liable to a rebound if speculators returned.

"On balance, we see more potential upside than downside to ag prices as speculators look to reposition on any sustained risk-on rally," Mr Deane said.