Friday, April 25, 2008                                 By Shawn Wade

      The best news to come out ofWashington, DC this week on the farm bill may have been that there waspractically nothing newsworthy to report, aside from Congress unanimouslypassing another one week funding extension, until today.

      Everything seemed to breakthrough on the bright side today as multiple reports indicate that House andSenate negotiators have reached an agreement on virtually all of the budgetoffsets needed to complete the bill and Administration officials signaledPresident Bush would sign the one week extension, despite asking Congress toscrap two years worth of work in favor of a one year extension of current lawearlier in the week.

      Farm bill pessimists,including the Bush Administration, had been saying the lack of new informationwas a sure sign that things weren't going well behind the scenes and the bestoption was for Congress to "throw in the towel" and pass a one-year extensionof current law.

      Optimists on the other handhad taken a decidedly "glass is half full" approach to the situation andbelieved the lack of news really meant negotiators were just too busy gettingthings done to do anything else.

      It appears the optimists hadit right and now quite a few farm bill insiders, backed by April 25 pressreports that the budget deal has finally been agreed on, seem to believe thatconferees will be able to get to work on the few remaining policy differencesover the weekend.

      Details of the budgetagreement aren't yet available, but it appears that the deal will allow all ofthe $10 billion that was needed to come from an extension of customs user feesthat are classified as negative budget outlays and are not tax increases orrevenue raisers. White House officials have not publicly commented on theirposition relative to the use of customs user fees to fund the extra farm billspending.

      From this point forward theprocess could actually move pretty fast since some believe the House would liketo vote on a final conference report before the May 2 expiration of the latestfunding extension to avoid potentially troublesome procedural issues on thefloor.

      The fact that Congressshrugged off yet another opportunity to backslide on the issue Thursday byunanimously agreeing to a second straight one-week funding extension, appearsto be a good omen. Senate leaders opted for a single week extension instead ofone lasting two weeks in order to keep the pressure on negotiators to finishthe job they started nearly six months ago.

      The House quickly followedthe Senate's lead and sent the extension to the White House Thursday afternoon.Administration officials, citing the same reasons given for approving the previousweek's extension, said the President would sign the measure today and giveCongress a few more days to complete the farm bill.

      House and Senate confereesand staff have apparently already gone to work on all remaining issues betweenthe House and Senate legislation. In fairly short order conferees are expectedto completely close out the first six farm bill titles that have beendiscussed, and tentatively agreed on, pending the outcome of the budgetagreement.

      Next on the list will behashing out the remaining differences that must be taken care of at theconference member level such as the revising farm program pay limits andprogram eligibility rules involving a revised Adjusted Gross Income limit. Lesscontroversial issues have been turned over to staff with the goal of havingthem settled over the weekend.

      If the activities indicatedabove are completed on schedule it appears that the last formal conferencemeeting could occur as early as April 29 and that floor consideration in boththe House and Senate could occur late next week.

      The way things look nowchances are good that a solid piece of agriculture policy could be approved bythe end of next week. That result will go a long way toward shoring up thesafety net U.S. agriculture so desperately needs heading into the 2008 growingseason.

      Any way you cut it, though, aslow week of farm bill news has ended with a flurry of activity in Washington.Prospects for completing the bill haven't looked this good in months and it issafe to say that the end can't come too soon for anyone that will be impactedby its provisions.



Friday, April 25, 2008                                 By Shawn Wade

      Despite hope for a betterresult, few, if any, of the participants in the April 22 Commodity FuturesTrading Commission forum left the CFTC's Washington hearing room feeling betterabout their individual situations.

      The forum, called for thepurpose of discussing what could be done to curb further commodity marketdisruptions, included more than two dozen participants. Each was given anopportunity to make a statement, suggest possible fixes and discuss ideas forcalming extremely unsettled commodity markets.

      In order to insure the impactthis situation is having on the High Plains cotton industry was communicated tothe CFTC, Plains Cotton Growes, Inc. submitted a written statement andrecommendations to the agency on April 22.

      The inclusion of such a widearray of affected parties gathered to discuss the issue should have beenimpetus enough for CFTC staff and USDA representatives on-hand to lend somecredibility to the notion that increased speculative activity is having atremendous negative impact on the ability of commodity markets to perform theirprimary role roles in price discovery and risk management.

      That didn't seem to be thecase as no formal action was taken and most of the information presented byCFTC and USDA staff painted the situation as one predominantly driven byold-fashioned supply and demand forces.

      The generally agreed beliefamong producer groups and commodity traders is that increased market activityby large, well-financed index and hedge funds is playing a central role in theincreased volatility exhibited in today's commodity markets.

      At the end of the day, it wasclear CFTC Commissioners are reluctant to move quickly in any direction. Onegood outcome of the forum from a commodity perspective was the indication byCFTC Acting Commissioner Walter Lukken that the agency will step back andrethink its plan to approve an increase in speculative position limits.

      Unfortunately for cottonproducers wondering if they will ever get an opportunity to capitalize on therecent increase in cotton futures prices, no changes were immediatelyforthcoming from the CFTC.

      Even though immediate actionwas one of the things some forum participants were hoping would begin theprocess of restoring the connection between cash market prices and the futuresmarket, it appears that action could be weeks or even months away.

      In its statement, PlainsCotton Growers urged the CFTC, and the individual commodity exchanges, to movequickly to increase transparency in the marketplace by making ALL marketparticipants subject to the same reporting rules and position limits; topermanently limit margin requirements to levels indicted by the daily marketclose; and to consider increasing speculative position margin requirements aswell as disallow any increase in speculative position limits.

      PCG noted that each of theserecommendations was intended to help restore the connection between cash pricesand the futures market and reengage the commodity markets in their traditionalroles of price discovery and risk management.


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