"Hedging in the futures markets only works to the extent that the price of the commodity in the cash market and the price of the commodity in the futures market converge as a futures contract expires."
"As to the issue of price convergence, a competing theory which has been offered for why there is a lack of price convergence is that the Chicago wheat contract is flawed."
"Do you believe that the dramatic increase in commodity indexed trading and the futures which are purchased to hedge against a risk, has played a significant role in the failure of convergence?"
"And when are you going to be deciding whether to carry out that mandate--in other words, remove the exemptions, remove the waivers?"
"I think that we have the clear authority to do it as it relates to the two no-action letters."
"Well, thank you all very much for your testimony."
"Well, I am not sure I understand your explanation as to why you disagree that the storage cost shift cannot explain this increase in the gap between futures and cash prices. Try it again."
"And that there not be waivers or exemptions?"
"So you would agree that the basis, the price gap, is larger than has been historically the case, is that correct?"
"But the volatility in the basis has had an effect on you."
"I am not sure I understand your explanation as to why you disagree that the storage cost shift cannot explain this increase in the gap between futures and cash prices."