It looks like markets have gotten the message from China on how they feel about rising commodity prices and the entire natural resource sector (along with stocks, bonds, and everything else) is beating a hasty retreat today. Bloomberg reports that the government might soon impose price controls so as to keep the populace from getting too fidgety.

China may impose price limits on food and toughen punishment of those found speculating on agriculture futures including corn and cotton to combat rising inflation, the China Securities Journal reported, citing an unidentified person.

The government may also crack down on hoarding, offer food subsidies and hold local mayors responsible for ensuring vegetable supplies and controlling prices, the report said. In May, the government said hoarders will be fined by up to five times the value of the commodities held, the paper said.
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Corn prices in China jumped to a record today as tightening supplies increased their investment appeal. Rice also reached an all-time high. China has already sold sugar, cotton, corn, aluminum and zinc from stockpiles in an effort to ease supply shortages and curb inflation, which gained at the fastest pace in two years last month.

“Prices of food and cotton have gone up to the point that the government has decided to step up efforts to crack down on speculation and make sure that inflation doesn’t flare up further,” Dong Shuzhi, manager at Beida Founder Commodities Co., said by phone from Shanghai today.

Consumer prices in China gained 4.4 percent in October. The government’s full-year inflation target is 3 percent. China’s central bank raised bank reserve requirements last week and last month increased interest rates for the first time in three years to tame inflation.

Of course, if you ask an economist (like this one writing in The Economist), you’ll learn how it’s not the Fed’s money printing campaign that is causing all these troubles.