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CFTC's Agricultural Advisory Committee discusses commodity volatility, pricing

Tarbert unveils plan to appoint a CFTC liaison to Agriculture Department

23 April 2020

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The U.S. Commodity Futures Trading Commission's Agricultural Advisory Committee (AAC) held a public meeting via teleconference on April 22 to discuss the Coronavirus (COVID-19) pandemic and its impact on agricultural commodity markets.

Chairman Tarbert made several notable announcements during the meeting including the establishment of a Livestock Market Task Force, led by Dave Amato, an economist in the CFTC’s Division of Market Oversight (DMO),  to explore "any indication that prices are moving in an uneconomic manner relative to the underlying commodity’s cash prices." Additionally, Tarbert announced his intent to appoint a CFTC Liaison to the U.S. Department of Agriculture -- the first in the CFTC’s 45 years of existence. While Tarbert highlighted the commission’s primary focus of ensuring orderly and functioning markets during the pandemic, including providing temporary relief where necessary, he made clear his intent to move forward with his agenda including rulemakings that have been proposed or may be proposed in the near term.   

Derek Sammann from the CME Group and David Farrell from ICE Futures provided the committee with updates on behalf of the exchanges and addressed questions about recent historic market volatility, including negative settlement of the May U.S. crude oil futures contract. Members of the advisory committee inquired whether it would be possible for agricultural contracts to venture into negative settlement, and while Sammann and Farrell acknowledged it was possible they stressed it remained very unlikely due to the ease and efficiency of storing grain, livestock, and even dairy, compared to the storage of physically delivered crude oil.  

The AAC meeting also featured U.S. Secretary of Agriculture Sonny Perdue, who provided an update about his agencies work to bolster the food supply chain, to investigate beef pricing margins and potential unfair market practices during the COVID-19 crisis, and to coordinate with the CFTC.  

Official statements from the CFTC

 

 

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