MEMPHIS – The National Cotton Council remains concerned about the ability of the futures to provide meaningful risk management and price discovery – so that commodity market participants can be better protected against manipulation.
“The U.S. cotton industry still believes more transparency is needed in trading,” NCC President/CEO Mark Lange said. “It is vital that price discovery be returned to futures, and that the risk management function of futures be restored.”
Lange said the NCC stands behind testimony presented to the Commodity Futures Trading Commission (CFTC) in April by American Cotton Producers President Chuck Coley. Concerns raised in that hearing were reiterated in written comments to a House agriculture subcommittee. Those include: the need for more transparency in trading and reporting; additional regulation of swaps and Over-the-Counter (OTC) trades; and speculative limits and reporting requirements must be consistent across all market participants.
Coley also had testified that, “Cotton futures markets must be returned to their historical function of price discovery and risk management relative to real market conditions. Cotton producers face extreme pressures from escalating input costs which threaten their viability and yet currently have no mechanism to forward price their production at reasonable costs.”