Opening Statement of Commissioner Jill Sommers Before
the CFTC Agricultural Advisory Committee, Washington, DC

October 29, 2009

Good morning. Thank you all for being here to discuss the important issues being considered by the Agricultural Advisory Committee. I want to particularly thank Commissioner Mike Dunn for his leadership and all of the people who have participated on the Subcommittee on Convergence. I appreciate your service to the Commission and look forward to hearing your report and recommendations. I also appreciate the Chicago Board of Trade's proactive efforts to try to find a solution to this problem. Finally, I want to thank our Commission staff who has worked very hard to help us better understand this complex issue.

Over many months we have devoted significant time and effort to examining poor convergence between cash and futures prices in certain agricultural futures markets, particularly the CBOT soft red winter wheat contract. CBOT's recent rule changes providing for a seasonal storage rate and additional delivery locations, in addition to other changes, have reduced the basis, but the contract continues to exhibit a lack of convergence problem, particularly when the futures market is near or exceeds full carry.

This issue is core to our mission. I want to make sure this contract is accurately discovering prices and is providing an opportunity for producers and commercial entities to hedge price risk. Many market participants have expressed concern about the continued usefulness of this contract, which is troublesome. We must attempt to restore confidence that our markets operate efficiently and effectively, and to strengthen market integrity. Public confidence in the markets is crucial.

I am hopeful that through the dialogue at today's meeting we can come to an agreement on appropriate next steps that will allow us to finally move toward a resolution.

I appreciate your input over the past several months, as well as the time and effort you have devoted to finding workable solutions and look forward to hearing the discussion.

Last Updated: June 11, 2010