CFTC Plans More Disclosure for Agricultural Markets
By Alan Bjerga and Matthew Leising
June 3 (Bloomberg) -- The top U.S. commodity regulator will require investors and index funds to disclose more information about their holdings in agricultural markets after farmers and lawmakers alleged speculators had inflated food prices.
The Commodity Futures Trading Commission, in an e-mailed statement, today called for more information from index traders and swaps dealers in the futures markets. The CFTC will grant fewer exemptions to speculative-position limits related to agricultural index trading and plans to provide more detail on trader holdings starting next month.
``We want to make sure that markets are functioning correctly,'' acting Chairman Walt Lukken told reporters in a teleconference today in Washington. ``We want to encourage access to markets, but we want to be sure too much money isn't distorting markets artificially.''
The CFTC, which regulates markets including silver and soybeans and derivatives linked to stock indexes and bonds, is under pressure from Congress to ensure markets aren't being manipulated. The prices of gold, copper, corn and wheat rose to records, gasoline at the pump is the most-expensive ever, and the government forecast an increase for U.S. food costs that will be the biggest since 1989.
Joseph Lieberman, chairman of the Senate Homeland Security and Government Affairs Committee, said May 20 he is considering legislation limiting large institutional investors in commodities markets. The legislation would aim at speculators and other investors who use commodities to hedge against swings in investment instruments such as stocks and the U.S. dollar, Lieberman, a Connecticut independent, said during a hearing.
Index-Fund Speculation
Billionaire investor George Soros said today in testimony before the Senate Committee on Commerce, Science and Transportation that record oil prices weighing on the economy are the result of a ``bubble'' caused by speculation from index funds and a tight balance between supply and demand.
The CFTC is working on ways to improve risk-management choices for farmers and agricultural businesses, including developing alternative financial tools and a plan for the clearing of agricultural swaps, according to the statement.
``The commission recognizes that -- although no single solution exists -- there are several steps it can take to improve oversight of the futures markets and bring greater transparency and scrutiny to the types of traders in the marketplace, including large index traders,'' the CFTC said in a statement attributed to Lukken and Commissioners Michael Dunn, Jill Sommers and Bart Chilton.
Market Influence
The portion of each commodity market held by index funds varies by product, from 40 percent of cattle futures to 15 percent of other goods, Lukken said. Rising concern over higher agricultural prices justifies the CFTC's inquiry, said Lukken, whose action received a favorable reaction from Senate Agriculture Committee Chairman Tom Harkin.
``Today's announcement outlines a prudent approach, and it's urgently needed for American commodity producers and consumers,'' the Iowa Democrat said in an e-mailed statement.
The National Farmers Union, which employed Chilton as its chief of staff before he joined the CFTC, called the initiatives a ``first step'' toward addressing the concerns of producers. The NFU has said increased market volatility may challenge the ability of farmers to hedge their financial risks.
``We will continue to pursue changes to ensure we have a fully transparent market free of manipulation by speculators or others,'' Tom Buis, president of the second-largest U.S. farmer group, said in a statement.
Speculative Positions
The CFTC said it is withdrawing plans to increase speculative position limits on some agricultural futures contracts, which Lukken said would be ``bad timing'' given current prices. That proposal also would have created a risk- management hedge exemption from federal speculative position limits for agricultural futures and option contracts.
The agency also is investigating possible manipulation of the cotton market in February and March, in addition to a probe announced May 29 into the price of crude oil, according to the CFTC release.
Cotton traded on IntercontinentalExchange Inc.'s ICE Futures U.S. unit rose to a 12-year high of 92.86 cents a pound on March 5, then fell as much as 26 percent by March 20 to 69.02 cents. Supplies in the U.S. didn't justify the increase, cotton merchants told the commission during an April hearing on the role speculators are playing in rising commodities prices.
Moves Applauded, Derided
Atlanta-based ICE said it ``applauded'' the CFTC's move to tighten regulation. ``ICE Futures U.S. strongly supports changes that will enhance the quality of oversight and availability of public information,'' the exchange said today in a statement.
The oil probe follows a CFTC statement May 29 that it has been investigating the transportation, storage and trading of crude oil in the U.S. since December. Oil rose to a record $135.09 a barrel on May 22.
The regulator, which generally keeps its inquiries confidential, didn't say when the oil-market probe will end and didn't name any companies being targeted. The details of the investigation were confidential, it added.
That probe is a ``waste of time,'' billionaire hedge-fund manager Boone Pickens said yesterday.
``There's nothing to it to start with,'' Pickens said in interviews at an American Wind Energy Association conference in Houston. ``That's not what's happened. You have 85 million barrels a day of oil available in the global energy market and 86.4 million barrels a day of demand. So the price of oil is going to go up until you can kill demand.''
anzi piango 
anche rame si e' stoppato , ma pare affili le spade...
non si prende un coltello in caduta, ha ancora strada da fare al ribasso
