_ By Mark Shore
Over the years I’ve often heard the question “why are the U.S. House and Senate Agricultural committees given jurisdiction and oversight of financial firms?” This question sometimes appears in the managed futures course I teach at DePaul University.

With the testimony of Jon Corzine former CEO of MF Global before the House Agricultural Committee on December 8th, 2011 and his testimony with the Senate Agricultural Committee on December 13th, 2011 regarding the bankruptcy of MF Global, the 8th largest U.S. bankruptcy, this would be a good opportunity to discuss this question.

Let’s start with the basics:
The U.S. Senate Agriculture, Nutrition and Forestry Committee maintains jurisdiction on 17 topics including agricultural economics and research, agricultural commodities and price stabilization. Four of the five subcommittees including the Subcommittee on Commodities, Markets, Trade and Risk Management have oversight of the Commodity Futures Trading Commission (CFTC). 

The U.S. House of Representatives Committee on Agriculture has jurisdiction of oversight on 20 various topics including agricultural economics and research, stabilization of agricultural prices and commodity exchanges. The General Farm Commodities and Risk Management subcommittee maintains oversight of the commodity exchanges.

Of course this begs the question, why are these committees given jurisdiction over commodity exchanges and the CFTC?  

To find the answer, let’s take a walk down history lane:
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After selling off earlier this year the last few weeks have seen a little rally from the lows. Late February oats signaled a start of a rally, followed by corn, wheat and soybeans in early March. This rally has several possible components. 1) As we enter the spring planting season, grains have a tendency to bottom. 2) In recent weeks the market participants are cautiously increasing confidence that the American economy may be starting to stabilize, or at least less fear of a falling economy. Thus greater demand for commodities. 3) Talk that China's economy may be starting to bottom is also supporting not just grains, but several commodities. Export demand is always a strong factor in pricing grains. 4) The last several weeks have seen a falling dollar and this equates to increasing overseas demand for commodities. 5) Another level of support has also been seen in the recent rally of the Australian $ and the Canadian $.

The grain markets may be getting a little tired. They are nearing selling signals and will either find support in the next couple of days or begin the next leg down. Basis the May contracts, corn has major support in the $3.85 to $3.79 range. Soybeans has major support in the $9.37 to $9.30 level. Wheat did signal a short move yesterday and is breaking major support levels and would need to break above the $5.63 resistance level to find the next bull market.

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