On June 24, the U.S. Senate Permanent Subcommittee on Investigations released its report on speculative trading in the wheat futures markets by commodity index traders. In its report, the Subcommittee concluded that large purchases of wheat futures over the last five years by index traders, who commonly trade futures contracts to offset their financial exposure to index products, “constituted excessive speculation” and were responsible for inflating futures prices, disrupting convergence between wheat futures and cash market prices and creating unwarranted cost and price risks for producers and end users. The report made several recommendations to lessen the impact of speculative trading on wheat markets, including phasing out existing position limit waivers previously granted to index traders and, if necessary, implementing reduced position limits for index traders.
The Subcommittee will hold a hearing on excessive speculation in the wheat market in July.
Click here for the press release on the Subcommittee’s report, as well as a link to the full report.