Commodity futures market manipulation

NFU Renews Call for Commodity Market Investigation

MINNEAPOLIS (June 17, 2009) – The National Farmers Union Board of Directors today called on Commodity Futures Trading Commission Chairman Gary Gensler to conduct an investigation regarding the extreme futures price volatility and lack of convergence in the hog, grain, dairy and cattle markets.

It appears futures trading and cash market transactions in the grain, dairy and livestock markets are inconsistent with supply and demand fundamentals as the result of a handful of commercial interests’ behaviors” the board wrote. The board letter expands on a similar letter sent to the CFTC in February.

Last year, local elevators and other commercial users of the commodity markets were faced with historic margin calls and quickly maxed out their lending limits. As a result, commercial users backed away from offering producers critical forward marketing tools, making it difficult for producers, paying record high input costs, to protect their financial risk.

The board also urged the CFTC to review the effects of concentration within the grain and livestock sectors. “The level of consolidation and concentration within nearly every sector of agriculture is staggering” the board wrote.

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