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Trade Disputes CBOT Study

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The U. S. grain industry says a study suggesting the Chicago Board of Trade’s beleaguered wheat futures contract has not been ruined by huge inflows of Wall Street money does not fix a contract it calls “broken.”

The National Grain and Feed Association said a study issued by top agricultural consultant Informa Economics, commissioned by CBOT parent CME Group and supplied with more detailed trading data than usually made public by the Commodity Futures Trading Commission, was inconclusive.

“We are trying to focus on some doable way to improve performance more than continuing to harp on what is causing it,” NGFA director of marketing Todd Kemp said in an interview.

“It’s hard to evaluate the study completely without knowing what sort of information CFTC was making available to the exchanges and these economists.”

NGFA, which groups more than 950 grain processors, exporters and other merchants, has complained for two years to the CME and CFTC that unfettered Wall Street investment funds pouring into CBOT grain markets had “broken” them as an effective vehicle to hedge grain ownership by offsetting risk.

The Informa study, covering January 2005 through June 2008, analyzed commitments of traders data specially broken down by the CFTC into five categories – small trader, commercial, noncommercial, indexer and money manager. The 300-page study “found very little evidence that the trader groups of interest, index funds and managed money, were routinely detrimental to any of the studied markets.”

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