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Our Views

Our Views Columns

Date: 3/14/2019

Title: NCBA Encourages Senate to Confirm CFTC Commissioner

This week the Senate Agriculture Committee heard from nominee Dr. Heath P. Tarbert, who is slated to be the next Chairman of the Commodity Futures Trading Commission (CFTC).  In his testimony, Dr. Tarbert highlighted his intent and desire to learn from agricultural producers that rely on the futures markets by getting outside of the Beltway and visiting operations in the countryside.

The hearing covered a broad range of issues involving agricultural commodity trading, but two exchanges are worth highlighting:

  • Senator Amy Klobuchar (D-MN) asked about a 2018 CFTC report investigating sharp price movements in futures markets. Dr. Tarbert clearly understood the report’s main conclusion: That the current market structure was not the cause of volatility. He also mentioned that the CFTC would continue to monitor the markets as new trading data becomes available.
  • Senator John Thune (R-SD) asked about the current relationship with the Chicago Mercantile Exchange (CME), particularly regarding transparency and market manipulation in cattle markets. CME, NCBA, and other livestock industry stakeholders have been working together closely to address concerns surrounding these issues in recent years. Dr. Tarbert acknowledged that the markets were not perfect, but felt they are moving in a positive direction. He also noted that:
  • Price convergence is a key feature of futures contracts that both traders and producers depend on.
  • Recent briefings from the CFTC and industry on the cattle market have not indicated any instances of market manipulation.

Overall, Dr. Tarbert demonstrated a firm grasp of agricultural commodities and a willingness to learn more about the issues facing producers. Such a commitment is crucial for NCBA members, who rely on price risk management tools to keep their businesses profitable over the long-term. Cattle producers use derivatives products to manage the impacts of many different scenarios, including movements in feed costs, unexpected changes in supplies, and market reactions to government policies.

NCBA supports the swift confirmation of Dr. Tarbert and signed onto a letter of support with a coalition of other industry groups. NCBA is confident that under Dr. Tarbert's guidance, the CFTC will continue to provide producers with safe, transparent markets for risk management.