Risk Management

At the culmination of many months of discussion both internally and with the CME Group, the NGFA on June 20 transmitted a letter to CME with recommendations for changes to the storage rates for corn and soybean futures contracts.  The letter from NGFA Risk Management Committee Chair MJ Anderson, director of risk management and merchandising at The Andersons Inc. in Maumee, Ohio, acknowledged the huge importance of the corn and soybean contracts for purposes of risk management and price discovery in the grain, feed and processing industry, but also expressed belief that convergence ... Read More

Prior to the House Agriculture Appropriations Subcommittee’s May 9 meeting to consider its 2019 fiscal year agriculture appropriations bill, several significant U.S. agricultural producer and agribusiness groups urged the committee to incorporate the full budget of $281.5 million requested by the Commodity Futures Trading Commission (CFTC). “The commission’s responsibilities have expanded dramatically in recent years, but funding has not kept up,” noted the NGFA and 13 other ag groups in a May 7 letter to Subcommittee Chairman Robert Aderholt, R-Ala., and Ranking Member Sanford Bishop, ... Read More

As follow-up to customer conversations and an industry focus group meeting last month in Chicago, the CME Group has initiated a broader industry survey to take feedback on potential changes to its corn and soybean contracts. In particular, CME invites NGFA-member firms to react to a potential increase in the fixed storage rate for the corn and soybean contracts by completing the survey here.  Responses are requested by May 18. The survey comes in the wake of numerous conversations between CME and NGFA, led by the Risk Management Committee, about inconsistent convergence especially ... Read More

By Todd Kemp, Senior Vice President of Marketing and Treasurer With the April 24 nomination of derivatives lawyer and former Commodity Futures Trading Commission (CFTC) general counsel Dan Berkovitz to fill a vacant Democratic seat, the agency soon could have a full complement of five commissioners for the first time in several years.  Berkovitz joins Republican nominee Dawn Stump, who was approved by the Senate Agriculture Committee last year but has been awaiting a confirmation vote by the full Senate to fill a vacant Republican seat. Traditionally, it is common for nominees ... Read More

During a Commodity Futures Trading Commission (CFTC) Agricultural Advisory Committee meeting in Kansas this week, grain industry representatives voiced concerns to CME Group Inc. representatives about block trades, which they say reduce transparency in agricultural futures markets. The committee meeting, chaired by CFTC Commissioner Russ Behnam, also included Chairman Christopher Giancarlo and Commissioner Brian Quintenz. CME, which owns the Chicago Board of Trade and the Chicago Mercantile Exchange, began allowing privately negotiated block trades in corn and wheat markets in ... Read More

By Todd Kemp, Senior Vice President of Marketing and Treasurer The CME Group is in the process of evaluating potential changes to two of its core agricultural contracts – the CBOT corn contract and the KC hard red wheat contract. Led by the Risk Management Committee, the NGFA has provided feedback to CME throughout its review processes (including a letter submitted in Nov. 2014 with NGFA’s recommendations on the corn contract). CME’s review of the KC wheat contract is more recent, with potential changes just now being unveiled; the NGFA has not provided formal input to CME on that contract ... Read More

By Todd Kemp, Senior Vice President of Marketing and Treasurer A delegation of seven members of NGFA’s Risk Management Committee traveled on Nov. 29 to Washington for meetings with the three current CFTC commissioners (two vacancies remain unfilled) and their senior staffs focused on the pending final rule that would implement position limits on a broad range of commodities (in addition to grain and oilseed futures contracts that have operated successfully for decades with position limits). The effort was a follow-on to earlier meetings with the commission in late June by another ... Read More

By Todd Kemp, Senior Vice President of Marketing and Treasurer The Commodity Futures Trading Commission (CFTC) will convene a public meeting on Nov. 4 to consider a supplemental proposal regarding a new regulatory regime for automated trading, including high-frequency electronic trading. An earlier proposal, published by the CFTC on Dec. 17, 2015, was the first attempt ever by the agency to establish regulatory oversight of automated trading. Among other concerns, that proposal generated consternation among high-frequency trading firms that would have been required to divulge source code ... Read More