Gary Gensler, chairman of the Commodity Futures Trading Commission, told the US Senate in late July that the continued lack of convergence between cash and futures prices for wheat was unacceptable and had diminished the usefulness of the futures market in the product.
Gensler was testifying to the Senate’s Permanent Subcommittee on Investigations, in response to a report by that subcommittee called Excessive Speculation in the Wheat Market.
The report found that commodity index investors were one of the primary causes for an excessive divergence between cash and futures prices. Gensler said: “The average difference between the Chicago Board of Trade wheat futures price at contract expiration and Toledo cash wheat prices rose from an average of about 5¢ per bushel in 2005 to 47¢ in 2006, narrowed to 24¢ in 2007, but widened again to $1.07 in 2008.”
Unacceptable pricing
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