House Ag Committee Chairman Collin Peterson, D-Minn, warned Wednesday that some of the legislation proposed to limit speculation in energy futures contracts "may be good for those contracts, but may have a negative effect for other sectors, including agriculture."
Peterson pointed out those larger margin requirements "would be very problematic." He noted that current grain price volatility "has already made it tough for elevators in farm country to meet margin calls." He noted some elevators have had to double or triple their margins and limited their ability to offer forward pricing contracts to farmers while noting that some elevators have simply suspended forward contracts.
The House Ag Committee opened a series of three hearings Wednesday with the goal of completing a "bipartisan, consensus bill" before Congress leaves for a month-long recess is early August. The committee heard from six House members on Wednesday who each have introduced bills aimed at new regulatory authority for the Commodity Futures Trading Commission. Hearings resume Thursday at 10 a.m. and will include witnesses from commodity exchanges, utilities that hedge energy costs, pension fund managers, and academics with expertise in futures markets.
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