USCA asks for more CFTC oversight
November 2, 2017
Citing a news report that the Chicago Mercantile Exchange is planning no more changes to the live cattle contract, the U.S. Cattlemen's Association has asked the Senate Agriculture Committee to increase oversight of the Commodity Futures Trading Commission and consider appropriators' unwillingness to provide more money to the agency that oversees the futures industry.
During the last two years, the CME has cut trading hours, implemented new rules on order messaging and taken other steps to limit volatility in its cattle market, Reuters reported.
Last year, U.S. cattle producers called on CME and federal legislators to reduce volatility after cattle futures prices fell sharply in 2015 from record levels in 2014, but Tim Andriesen, CME's managing director of agricultural products, said, "Right now we don't think there's a problem to solve, so trying to do something different wouldn't make a lot of sense," Reuters reported on Oct. 11.
"The CME Live Cattle Contract represents a perishable and cyclical commodity market with no natural long hedger," U.S. Cattlemen's Association President Kenny Graner wrote in a letter to Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich.
"CFTC Chairman J. Christopher Giancarlo appreciates the intricacies of the market's behavior," Graner wrote. "In his keynote address at the 2017 Montana Ag Summit, and in his recent testimony to the House Agriculture Committee, (Giancarlo) noted that increasing the number of individuals working within the CFTC on market intelligence and contract design for derivatives is a top priority for his agency. USCA echoes this sentiment, as the limited resources available to the CFTC for monitoring and analyzing derivatives markets, especially the live cattle market, are severely lacking."
"We think there is more to be discussed, and that an increase in funding for oversight personnel would only serve to better the contract," Lia Bondo, USCA director of policy and outreach, added in an email.