CFTC Commissioners Debate Pandemic Risks to Agricultural Sector

The CFTC Agricultural Advisory Committee debated the impact of the COVID-19 pandemic on agricultural commodity markets.

At the public Committee meeting, the CFTC Commissioners described COVID-19-related challenges and recent agency initiatives to mitigate risks to the agricultural sector:

• CFTC Chair Heath P. Tarbert highlighted the formation of a livestock markets task force to oversee real-time price fluctuations in certain contracts (e.g., live cattle, feeder cattle, lean Hogs, etc.). The task force was set up to detect futures prices moving in an "uneconomic" manner compared to their specific underlying commodities' cash prices. The Chair also noted the recent appointment of a CFTC Liaison to the U.S. Department of Agriculture.

• CFTC Commissioner Brian Quintenz emphasized the importance of futures exchanges supervising offered futures contracts, with the goal or expectation of convergence between futures and cash prices. He indicated that the exchanges were failing to do a fundamental part of their job when consistent convergence did not exist.

• CFTC Commissioner Dan M. Berkovitz reemphasized the importance of a well-functioning derivatives markets in helping farmers with risk management and price discovery.