WHY IS IT AN ISSUE?
Volatility within commodities markets has dramatically increased since the start of the 21st century. Market fundamentals have changed, resulting in big impacts on the way markets now operate.
MARKET VOLATILITY
Index funds play a major role in today’s market volatility. Currently, index funds operate under the definition of a commercial hedger. Typically, this definition is reserved for entities that either produce or take delivery of the commodity. Index funds should operate within the markets under the same purview as the traditional speculator, who is subject to necessary position limits, preventing these entities from manipulating the price of any commodity.
ABA's Position on Commodities
ABA actively monitors and engages in agricultural and commodity spheres to ensure stability and certainty for bakers. We know that even the smallest increase in an input cost can become very impactful for the final product. ABA regularly engages with USDA and the Wheat Quality Council and USDA to ensure access to high-quality wheat and to encourage research dollars for improved innovation and technologies ABA also holds a seat on the Commodity Futures Trading Commission (CFTC) Agricultural Advisory Committee giving the industry a seat at the table on a variety of agribusiness issues.
ABA is also heavily engaged in the effort to reform the outdated US Sugar Subsidy Program. It is a priority to seek a free market for sugar supplies. As major industrial users, bakers and other food and beverage manufacturers pay an arbitrarily high price compared to the rest of the world. We have successfully created short-term progress with increases in TRQ.
