Good morning and thank you, Mike, for the kind introduction, and to NGFA for inviting me to discuss the current state of the markets.  Your members’ ability to manage risk safely, predictably, and without undue burdens directly impacts the prices American consumers pay for food and related products and determines the livelihood of families around the country whose businesses, operations, and occupations directly serve grain, feed, and commercial enterprises.

The success or failures along the agricultural value and supply chains trickle down through the economy, impacting the regions they occupy in meaningful ways such as determining where employees spend their paychecks and whether they can afford to fix a roof damaged by storms or make mortgage and other loan payments.

Two weeks ago, I testified before the Senate Committee on Agriculture, Nutrition, and Forestry regarding CFTC oversight.[1]  The process for the 2023 Farm Bill is underway and your concerns and expectations are front and center.  With agricultural market developments at the heart of policy debates on a global scale due to increasing food prices, transportation challenges, ongoing market volatility, and the real risk of food insecurity, ensuring that the derivatives markets and the structures and intermediaries that support them remain resilient, accessible, and cost effective as a risk management and price discovery tool for the agricultural economy is the CFTC’s highest priority.

The derivatives markets are not only vital to agricultural stakeholders, but the information and data generated and disseminated by and through our markets underpin many more USDA-sponsored risk management programs such as crop insurance and commodity-based programs.

The CFTC’s focused, principles-based approach has proven both steady and exceptionally calibrated, even in times of market stress and record volatility.  During the past three years, the derivatives markets performed well for businesses who were able to hedge price risk under extreme pressures.  Our regulatory system and enforcement authority became vitally important as the pandemic, geo-political tension, extreme weather, and technology advancements--and disruptions--required commodity markets to absorb an unprecedented array of stress, generating volatility and creating conditions for a variety of market participants to explore strategies that may not reflect the same interests as end-users and main street Americans.

Our heightened vigilance these last years ensured that bad actors and speculative activity that can drive prices away from supply and demand were identified and addressed.  As we continue to focus on ensuring that markets reflect supply and demand in the cash markets, there is a delicate balance in ensuring that incentives remain for participants to trade and create liquidity, but to also ensure that as hedging becomes more challenging and requires greater sophistication due to market consolidation among intermediaries serving smaller end-users like farmers and ranchers, we maintain equal access and transparency.

The CFTC will continue engaging, traveling, and visiting our core constituency to gain a clear understanding of what we can do to support your success.  Additionally, we will be leveraging the strong connections the CFTC develops though its advisory committees.  I am incredibly proud of my efforts as former sponsor of the CFTC’s Market Risk Advisory Committee (MRAC), but I am thrilled to be looking to the future, and sponsoring the CFTC’s Agricultural Advisory Committee (AAC).

Reflecting on the commodity roller coaster of 2022, the AAC’s December meeting[2] featured panels on the impacts of geopolitics and weather on the agricultural economy, the agricultural value chain and sustainability issues, and shipping, freight, and storage impacts on the grain trade.  Following these panels, Committee members provided thoughtful recommendations as to future areas of inquiry by the Committee and some general market observations, including: access to futures commission merchants by smaller market players; the impacts of the SPAN-2 initial margin framework and on agricultural derivatives; supply chain volatility and its impact on agricultural prices; derivatives data dissemination throughout the industry; and the impacts of carbon credit markets on agri-businesses with a focus on farmers and lenders.

On this final issue, consistent with my recent testimony I continue to believe the CFTC as a market regulator has a role to play in the in voluntary carbon markets.  As we have seen the listing and growth of listed futures on voluntary carbon credits, the agency’s relationship and responsibility is real.  These markets present an opportunity for the agricultural economy, but they must have integrity and adhere to basic market regulatory requirements.

During my testimony, I made clear that the CFTC’s strength is to ensure that these developing markets remain resilient as we face extreme and dramatic weather events that will impact pricing and volatility.  And we can police them for fraud and manipulation. The CFTC stands ready to participate, to lift the integrity of developing markets, using our core principles as a model for success, and creating venues where farmers, ranchers, and other land owners feel comfortable participating.

In the nearer term, the Agricultural Advisory Committee will next convene on April 5th.  The agenda is still in the works, but it promises to be another important discussion.

Before we move forward and discuss the current state of the markets, I want to again thank NGFA for hosting me and for your consistent support of the CFTC and its mission.