Senate Ag Committee Chair and CFTC Commissioners Air Concerns over Futures Markets

At a public meeting of the CFTC Agricultural Advisory Committee, CFTC Commissioners focused on the intersection of crop insurance and futures markets, the role of credit in risk management farm credit system, and trading in the agricultural market. In a follow-up conference, Senate Agriculture Committee Chair Pat Roberts (R-KS) expressed concern over the burgeoning trade war with China.

In remarks at the CFTC public meeting, CFTC Commissioner Rostin Behnam underlined the importance of price discovery and block trading in agricultural futures contracts. Mr. Behnam said that the CFTC, the Farm Credit Administration and stakeholders should continue to work with borrowers and creditors to educate them about the futures market and the role it plays in risk management. In a separate statement, CFTC Commissioner Brian Quintenz voiced his support for the CFTC initiative to evaluate crop insurance and the ability of the futures markets to "serve as an effective price discovery and risk management tool for the Ag community."

Senator Roberts (R-KS) gave the keynote speech at the follow-up Agricultural Commodity Futures Conference which was jointly sponsored by the CFTC and Kansas State University. He expressed concern over the burgeoning trade war with China and announced that the Senate Finance Committee will be holding a hearing looking at the Chinese market. He stated: "Drastic measures in trade policy result in harm to our producers in rural America. . . . History has shown us that agriculture far too often bears the brunt when retaliatory measures are taken. And, clearly, history is repeating itself. . . . Simply put . . . the entire food value chain – producers, manufactures, and consumers, will ultimately pay the price."
Senator Roberts criticized the CFTC funding decrease provided for in the Congressional appropriations bill and said that CFTC reauthorization should be accompanied by an "appropriate level of funding" to keep pace with regulatory developments. He also said that the nomination of Dawn DeBerry Stump to serve as a CFTC Commissioner has been pending for "long enough," and vowed that the Committee will move quickly to advance Ms. Stump, along with another nominee once one is announced by the White House.
Also at the Agricultural Commodity Futures Conference, CFTC Chair J. Christopher Giancarlo elaborated upon how current CFTC policies affect the agricultural futures markets. Mr. Giancarlo discussed the following CFTC priorities: (i) "Project KISS," which is aimed at reducing unnecessary complexity and duplicative regulations, including those that add costs to agricultural products, (ii) the implementation of LabCFTC to collaborate with external organizations to keep up with technological innovations, (iii) "right-sizing" the regulatory footprint of the CFTC by avoiding unnecessary rule drafting, and (iv) the continued enforcement of regulations against those in the derivatives markets. Mr. Giancarlo added that protecting market integrity is "essential to fostering robust trading and responsible risk taking."

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