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Ranking Member David Scott Opening Statement at Hearing "Rising Risks: Managing Volatility in Global Commodity Derivatives Markets"

WASHINGTON – House Agriculture Committee Ranking Member David Scott delivered the following statement at today's hearing “Rising Risks: Managing Volatility in Global Commodity Derivatives Markets.

[As prepared for delivery]

Thank you, Chairman Thompson, for convening today’s hearing, “Rising Risks: Managing Volatility in Global Commodity Derivatives Markets.” Global commodities markets help consumers and producers manage price risk and protect them from exposure to global events. The past several years have been rife with uncertainty and volatility that has tested the strength and resiliency of our derivatives markets.

This uncertainty and volatility has been driven by unexpected global challenges such as the Russian war in Ukraine and the COVID-19 pandemic. These events have disrupted global trade and the transportation of food, fuel, and fertilizer, creating supply shortages and price fluctuations.

Now, as we examine the reactions of our global commodity derivatives markets to these major events, it’s important we also take the time to focus on other sources of volatility and uncertainty that have emerged in recent years and will continue in the years ahead - such as an increase in the occurrence of extreme weather events, cybersecurity concerns, and the growth of fintech, and the preeminent impact of Russia producing nearly 66% of ammonium nitrate. We need to produce our own supply.

These concerns and challenges have presented unique tests for our agricultural markets – from historically low water levels that have cut river traffic in the Mississippi River basin, to reduced access to critical crop inputs and energy as a result of global trade restrictions and interruptions.

For example, wheat prices have experienced historic swings due to the disruption caused by Russia’s invasion of Ukraine and fears of a global wheat shortage.

Ensuring the orderly operation of our derivatives markets and preserving their role as a tool for price discovery and risk management is of utmost importance now more than ever.

Finally, I want to note that this year marks 10 years since the expiration of the Commodity Futures Trading Commission’s reauthorization. In my previous role as the Chairman of the our Subcommittee on Commodities Exchanges, Energy, and Credit, I worked closely with our Republican colleagues to pass bipartisan reauthorization legislation through the Committee. The importance of Congress passing this legislation cannot be understated.

The testimony each of you provide here today will be critical for our Committee to guarantee that the CFTC has all the necessary and appropriate tools to ensure the integrity, resilience, and vibrancy of the U.S. derivatives market.

I look forward to hearing from this distinguished panel of expert witnesses as they share their expertise and knowledge of the state of our commodity derivatives markets and the effectiveness of our existing tools for risk management.

I yield back.
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