Grain producers complain to CFTC about speculators

By Christopher Doering

WASHINGTON, June 8 (Reuters) - Grain producers told the Commodity Futures Trading Commission on Monday that another large discrepancy between U.S. grain futures and cash prices could devastate the industry.

Many blamed Wall Street's hot money flowing into the sector for pushing futures prices out of sync with underlying cash prices.

"It seems like this marketplace is continually getting more difficult for producers to participate in," Steve Wellman, a Nebraska corn, soybean and wheat farmer told the CFTC subcommittee on convergence.

The wheat industry was furious last year when wheat futures prices stayed far above cash prices at futures contract delivery periods, disrupting commercial hedging operations of wheat mills and exporters. Convergence problems also occurred in commodities including cotton and rice.

Industry groups said a mismatch in cash and future prices among many commodities has improved, but problems in wheat are evidence that more needs to be done quickly.

Matt Bruns with the National Grain and Feed Association said many of the country's elevators came close to running out of capital last year. Bruns doubted the industry could withstand another bout of mismatched prices.

"I'm not so sure from what we hear in the industry that we're able to get through this round two again," he said.

Exporters, processors, farmers and other groups have complained there has been a breakdown in the way Chicago Board of Trade futures contracts and cash market prices behave when contracts expire.