The House Agriculture Committee approved H.R. 2620, a bill that amends the United States Cotton Futures Act to allow for the development of certain new cotton futures contracts.
Current law requires that 100% of the cotton tendered under a U.S.-listed cotton futures contract be sampled and graded (classed) by the USDA. This restriction has hampered the development of new cotton futures contracts designed to hedge against market risks for foreign-grown cotton or U.S. cotton merchandised abroad. H.R. 2620 would amend the law to allow U.S.-based futures exchanges flexibility in handling foreign-grown cotton and foreign delivery points.
“I commend Rep. Austin Scott and Rep. David Scott for putting together this narrow, but important, change to the Cotton Futures Act. H.R. 2620 will help cotton merchants better hedge against the risks they face while preserving the tools currently available to the U.S cotton industry,” said Chairman K. Michael Conaway.
“H.R. 2620 will modernize cotton marketing by giving American-based futures exchanges the ability to use a new tool to handle foreign-grown cotton and foreign delivery points. The legislation will allow the cotton industry to better hedge against risk, which is especially important to compete in today’s global market. The House passed similar legislation last year via voice vote and I urge my colleagues to support H.R. 2620 this year,” said Ranking Member Collin Peterson.
“The House Committee on Agriculture took a simple and commonsense step forward towards needed modernization of cotton hedging ability for market participants. This is a market-oriented initiative reflecting the modern realities of the global cotton market, and I urge my colleagues in the House to support this legislation,” said Congressman Austin Scott, Chairman of the Subcommittee on Commodities, Exchanges, Energy, and Credit.
“I am pleased that the U.S. House Committee on Agriculture passed H.R. 2620, which will modernize the way in which our U.S. Exchanges can list cotton futures contracts. The Committee took an important step forward by allowing the U.S. futures markets to reflect the global market structure of today. As the Ranking Member of the Subcommittee on Commodities, Exchanges, Energy, and Credit, I remain committed to ensuring that our U.S. farmers, markets, and market participants remain competitive on the world stage,” said Rep. David Scott, Ranking Member of the Subcommittee on Commodities, Exchanges, Energy, and Credit.