05/19/08 Volatile futures trading

As commodity prices have soured the very volatile commodity markets have made challenging financing and risk management decisions even more difficult for farmers. That's the message American Farm Bureau President Bob Stallman took to a House Subcommittee last week. STALLMAN "We believe that the market mechanism at this point is bent if not broken." Stallman says few farmers receive the prices that people hear about on the futures markets. STALLMAN "These developments challenge producers' abilities to develop and implement risk management programs for marketing their products and the problem is compounded by the fact that many producers are being asked to make firm commitments for inputs far in advance of using them and not being able to establish the price for the crop for which those inputs apply." He also told the committee that the stampede of speculators into the futures market may be overwhelming the system He sees Index fund trading is one of the contributing factors to the higher futures prices. STALLMAN "But if you don't get convergence with cash markets there's little real information as to what the price level should be either for producers or consumers." Some subcommittee members feel that the only way to restore confidence in the markets and provide price stability for consumers is for Congress to do something. Voice of Idaho Agriculture Bill Scott