04/22/08 CFTC meeting today on agricultural markets

Farm and Ranch April 22, 2008 There is a widespread belief that the increased participation of big speculative hedge funds in commodity markets has resulted in greater volatility for both futures and cash markets. Concern about the situation has prompted the Commodity Futures Trading Commission to hold a public meeting on the issue. That meeting is today in Washington D.C. Mike Krueger, President of the Money Farm, a grain marketing advisory service in Fargo, North Dakota, says fund participation wasn't a problem in the past, but the situation changed when commodity prices ballooned to all-time record highs and volatility soared. Krueger: "And the crux of the problem in my estimation boils down to credit. Not that it is a bad deal, but when we have prices of $12,$13, $14 soybeans and $15 wheat and $5 corn, it taxes the credit requirements of the entire agricultural community. That credit crunch, just because of the enormous amounts of money required you know, to buy beans from a farmer, to hold them, put them on a train, get them sold, then you throw into the fact that with this huge volatility increased margin requirements and the fact the market went straight up, so any elevator or farmer or anyone else who was a true hedger, the cash requirements to maintain those hedges got enormous and that is really the root of the problem." The National Association of Wheat Growers is participating in that CFTC meeting today. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.