In response to the tounge lashing the Commodity Futures Trading Commission (CFTC) got from hedgers at its April forum to discuss record volatility in the agricultural markets, the agency released several agricultural market initiatives today that are designed to “improve oversight of the futures markets and bring greater transparency to the types of traders in the marketplace, including large index traders.” Among these initiatives are a review of trader reporting and classification and a withdrawal of the proposals to increase spec limits, which were widely criticized by participants at the forum. Perhaps in response to the very loud chorus of disgruntled cotton producers at the forum, the initiatives also include an investigation into the February/March price run-up in cotton. The Intercontinental Exchange, which took a lot of heat at the forum on the cotton situation, released a statement in support of the initiatives. In a conference call, CFTC Acting Chairman Walt Lukken said that the CFTC also is reviewing the process of how commercial and non-commercial traders are classified. The aim of all of these initiatives, he noted, is to “make sure the markets are functioning correctly.” Lukken also said that the authorities brought about by the reauthorization of the CFTC last week would be helpful in our “oversight of the exempt commercial energy markets” and “bring greater transparencies to those markets.”

Today the U.S. Senate Committee on Commerce, Science and Transportation became the latest Senate committee to hold a hearing to investigate whether increased speculation in the energy markets is affecting oil prices. Those testifying at the hearing disagreed with the current line of the Commodity Futures Trading Commission (CFTC) that factors relating to supply and demand are driving up the price of oil. Michael Greenburger, former director of the division of trading and markets at the CFTC, said that at least 70 percent of the crude oil market is driven by speculators. Greenburger said international oil contracts such as the Intercontinental Exchange’s (ICE) West Texas Intermediate (WTI) contracts traded in London are “robbing us blind.” On May 29, the CFTC announced energy market initiatives implementing expanded information-sharing to provide the CFTC with daily large trader positions in the UK WTI crude oil contract and provide crude oil large trader position data for all contract months in the WTI contract and announced the continuing of a CFTC investigation on crude oil. Greenburger noted that on the day of the CFTC announcement, the price of oil went down and the dollar went up.

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