04/24/08 Regulator gets input on futures markets

Farm and Ranch April 24, 2008 The Commodity Futures Trading Commission held a meeting this week to discuss some of the extraordinary dynamics in the agricultural commodity markets. Participants ranged from bankers, grain elevators, producers to the USDA and covered topics including price discovery, hedging, margin levels and credit. A concern of many within agriculture has been the impact upon the futures markets of hedge funds. The CFTC is considering two proposals to raise the speculative limits for certain agricultural commodities and to create a regulatory exemption from speculative limits for certain risk management purposes. But acting CFTC Chairman Walt Lukken told this week's meeting; Lukken: "While we have requested and received public comment on these proposals, give current market conditions and the uncertainty surrounding additional speculative money on these markets I will be very cautious about moving forward with such initiatives at this time. I believe that before acting this agency must be certain that additional speculative pressures will not exacerbate the anomalies we are experiencing in these markets." American Farm Bureau President Bob Stallman told the meeting that while speculators are an integral component of an open market it is up to the CFTC to ensure that participants do not prevent the futures markets from serving their roles as price discovery tools. Stallman requested the CFTC analyze the possible effects of lowering daily trading limits on margin requirements, risk, volatility and financing charges. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.