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Volatility in International Commodity Markets
February 1, 2011


Michael Dunn, Commissioner, U.S. Commodity Futures Trading Commission speaking at the Global Commodities Forum, February 1, 2011. Photo: U.S. Mission Geneva.

February 1, 2011

Global Commodities Forum 2011

Geneva, Switzerland

GENEVA – Michael Dunn, a Commissioner of the U.S. Commodity Futures Trading Commission (CFTC), joined international experts examining the commodities markets in the Global Commodities Forum in Geneva, hosted by the UN Conference on Trade and Development (UNCTAD). At a time when international prices of some commodities are increasing, Commissioner Dunn pointed out that there is little empirical data to support the commonly-repeated view that speculators caused the oil price spike in 2008. Dunn also analyzed possible contributing causes to the current volatility in agricultural markets, such as changes in demand, weather, supply constraints, and political uncertainty. He urged countries to provide greater market transparency, improve data collection, and avoid market-distorting actions that might worsen price volatility, such as export bans.

Commissioner Dunn emphasized that commodity derivatives markets perform a critical price discovery function. As such, a market regulator such as the CFTC should ensure stable and orderly markets and should not prevent or limit volatility that arises as a result of a change in market fundamentals. Well functioning markets can assist in stabilizing prices by providing signals to producers to increase production of key commodities that are in short supply.

Commissioner Dunn also discussed the CFTC implementation of regulatory reforms to enhance transparency, including through improved data collection, regular public reporting, and enhanced surveillance. Finally, Commissioner Dunn provided an overview of the recently passed Dodd-Frank Act which mandates that the CFTC establish aggregate position limits on all physical commodity derivatives positions across US futures exchanges. Commissioner Dunn’s presentation provided a comprehensive overview of the CFTC and its directives both domestically and within the international commodities arena.