Good morning.  I’m pleased to welcome you to the CFTC for the first Global Market Advisory Committee meeting of 2024.  I am very grateful for the service of the members, as well as Commissioner Pham for her leadership of this Committee, and the CFTC staff.

I am always reminded that commodity derivatives markets are truly global markets—markets that can have local impacts on end users and consumers.  Lately, I have followed how shifting weather patterns in West Africa have driven cocoa futures to record highs, and chocolate producers like Nestle have reportedly warned about price increases.[1]  Even Cookie Monster recently expressed concerns that the size of his favorite product, which includes chocolate as a key input, is shrinking.[2]

It is important to consumers, end users, and everyone else, that global commodity derivatives markets function well and are resilient to setbacks.  In many ways, these markets provide opportunities.  They provide opportunities to help manage one-off global shocks like the pandemic and Russia’s war against Ukraine.  They provide opportunities to weather stresses from a cyber-attack or from climate events.  They also provide opportunities for end users to discover prices, manage risk, and plan future investments.

It matters to end users producing food and fuel that these markets are resilient.  It matters, as well to regular people who shop at the grocery store, heat their home, and drive their car.

Last year, I told you that in order to build resilience, we should expect the unexpected.  By expecting market stresses, the collective “we” can plan for it.  We can build in measures to ensure that there is adequate liquidity in times of stress.  We can build in measures designed to ensure market stability.  And we can build in measures to ensure that commodity prices are not artificially increased, but instead reflect market fundamentals of supply and demand.

Commodity derivatives markets have performed well under remarkably stressful conditions.  I remain positive about the resilience of these markets.  We should always keep our eye on the goal of resilience.

In the last few years, the local impact of geopolitical events in global markets has been made clear.  We continue to see ongoing impacts on supply chains, transportation, and other inputs remaining from the pandemic.  And while the high volatility and high prices of oil, natural gas, and wheat caused by Russia’s war with Ukraine have subsided, the war continues to impact markets.  Attacks in the Red Sea have disrupted shipping traffic, including in the crucial Suez Canal channel, affecting inputs.

Additionally, these markets have seen local impact from sustained drought during the hottest year on record.  I have met with several CFTC registrants who have told me about how they are evolving to manage the changing economic and physical conditions from severe climate events.

Given the local impact from these global commodity markets, this is the time to plan for future market stresses and build resilience.  Market participants can take advantage of this opportunity while markets perform well to review lessons from the past, forecast future stresses, and review access to liquidity, in particular short-term liquidity.

The CFTC also has opportunities to review lessons from the past, plan for future market stresses, and build resilience.  The CFTC has proposed an operational resilience rule for swap dealers and brokers (futures commission merchants) that would also help plan for the unexpected, including for cyber events or other events that impact operations.

CFTC surveillance is particularly important when falling prices in our markets have not always translated to falling prices for the consumer.  I previously called on the CFTC to shore up its surveillance practices by conducting deep dive studies into certain major commodities during periods of high volatility and high prices to ensure that they were not driven by manipulation, excess speculation or other practices.[3]  The CFTC is well positioned to support whole of government efforts to ensure that the prices consumers pay reflect market supply and demand, rather than fraud, manipulation, or excess speculation.

Global market participants and the CFTC need to keep working together to expect the unexpected and plan to keep our markets resilient.  That is why I am grateful for your service on this Committee.