09/16/08 Grain industry says CME recommendations not enough

Farm and Ranch September 16, 2008 The CME Group has asked the Commodity Futures Trading Commission to approve changes to wheat futures contracts in what it said was an effort to improve convergence between futures and cash prices. One proposal is to add new delivery territories. The CFTC is accepting public comment on he recommendations through October 3rd. At a U.S. House Agriculture Committee hearing last week on commodity market speculation, CFTC Chairman Walter Luken was asked what he thinks of the CME's ideas. Luken: "Certainly these are steps in the right direction. I am not certain if they are enough steps in this area. But it is something we want to hear from all comers before we make a final decision if it's enough." Randy Gordon of the National Grain and Feed Association said the CME's recommendations won't solve the lack of cash/futures convergence, adding that heavy participation by index funds still needs to be addressed. Daren Coppock, CEO of the National Association of Wheat Growers agrees. Coppock: "As long as the swaps loophole remains open, investors that are just doing it for financial reasons to broaden their portfolio, also can have unlimited access or unlimited positions in those markets. We believe those speculators are absolutely necessary. The market won't work without them. But they are speculators and they need to be playing according to the appropriate rules and CME didn't include that." NAWG believes hedge exemptions should only be granted to traders with a commercial risk. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.