CFTC acting chairman Giancarlo discusses live cattle futures contracts concerns and Sec. Perdue expresses optimism on momentum regardingresuming China beef sales.
The 2017 Montana Ag Summit Thursday featured several high profile speakers and panels on various issues affecting present and future agriculture, and top of mind beef issues were included.
J. Christopher Giancarlo, acting chairman on the U.S. Commodity Futures Trading Commission, gave a speech on the future of commodity markets, placing emphasis on the need for regulatory reform and a need to change the “ill-conceived regulatory burdens” which add costs to doing business.
Giancarlo discussed a request from the National Cattlemen’s Beef Assn. over concerns about the impact of high frequency trading on certain dates in the live cattle futures contract during 2015 and 2016. He said CFTC’s ag futures market specialists on surveillance and market intelligence have done a thorough analysis of trading data and have examined trading patterns and practices of all major types including natural hedgers, market speculators, high frequency traders and large asset managers.
experts did not see patterns of behavior by any particular groups that would have an overall negative impact on the market,” Giancarlo reported. “Nevertheless, our market intelligence and surveillance will continue to carefully observe trading patterns, and should we observe any inappropriate or improper activity, we will take any or all action that may be necessary or appropriate.”
R-CALF as well as Sen. Chuck Grassley (R., Iowa) had also inquired to the Government Accountability Office whether meatpackers negatively impacted prices in the cash and futures markets in 2015. Giancarlo said CFTC is helping GAO in that effort.
The CFTC ag team also analyzed the live cattle futures market itself to ensure it was designed appropriately. They worked cooperatively with the Chicago Board of Trade (CBOT) and the cattle industry. “We identified design issues that when addressed preserved and strengthened the stockyard delivery system and made the terms of the contract more transparent to market participants,” he said.
Two weeks ago the Chicago Mercantile Exchange (CME) published for comment a set of proposals to improve price discovery and risk management functions. “The proposals seek to make the delivery process more efficient while ensuring the contract reflects cash market practices in supply and demand,” Giancarlo said.
He commended CME for the sensible improvements and said the CFTC will monitor contracts as these improvements come into effect.
Giancarlo was followed by a panel who spoke on the future of agriculture comprised of Secretary of Agriculture Sonny Perdue, chairman of the Senate Agriculture Committee Sen. Pat Roberts (R., Kan.), and Sen. Steve Daines (R., Mont.).
On April 17, 2017, Daines returned from leading an official congressional delegation trip to China where he hand-delivered four Montana steaks from Montana to Chinese Premier Li Keqiang and pressed Chinese officials to finalize negotiations and re-open Chinese markets to U.S. beef.
Daines said President Trump isn’t a president who just wants to talk, but rather “he wants action” and that’s being played out in the China beef discussions.
Perdue said in response to when beef sales could resume in China that in “trade negotiations it’s never over until it’s over,” but also noted there is “momentum and optimism” on both sides that hasn’t been seen in years.
Perdue said final protocols are being established now and should be done in a couple of weeks to allow for the deadline of beef being shipped no later than July 16.
Perdue also said “we’re serious about doing business” not only with China but also building momentum in recent discussions with Japan and South Korea and said this is “only the tip of the iceberg.”
[Copyright By Jacqui Fatka]