Why Commodity Policies Might Need Redrafting

September 16, 2013 10:00 AM
Why Commodity Policies Might Need Redrafting

USDA’s decision to begin publishing key agricultural reports during regular market hours—implemented in January—represents the "worst thing to ever happen to the markets," Bob Utterback, Utterback Marketing, tells the U.S. Farm Report Market Roundtable.

"I think it causes such a disruption in the market flow, and you don’t have time, the market’s more emotional. I think having the report when market’s closed, you can look at the numbers."
Bill Biedermann of Allendale, Inc., agrees.

"When I see Bob selling in the bean market, I have to hurry up and sell," Biedermann says. "I don’t have time to look at the number to make a decision, I’m selling because I saw him sell, and that’s the emotion that he’s talking about."

The time has come to revisit these and other policies and regulations put into place in the last couple of years, Biedermann. He acknowledges that doesn’t apply to all of the rules, some of which are working well.

"You’ve got to wire your money now if you have an account," he says. "You’ve got to wire it in every day, there’s no more two-, three-day margin calls. That is a good regulation. That keeps everybody stable."

At the same time, cash contracts need to remain part of the market spectrum, Utterback says.

"Farmers don’t know we have to take certification tests," he says. "They have an ethics test that we have to take, anti-laundering bill, files are edited, all those are good. I think they keep the criminals out of the business. What I’m trying to talk about is the influence on the marketplace. We’re taking away the virtues of the cash contract on the futures. The contract is really no longer a hedge contract."

Play the complete Market Roundtable discussion by watching the two clips below:

Watch Part 1 of the Market Roundtable:

Watch Part 2 of the Market Roundtable:

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