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Nebraska Grain Firm Out of Business Amid Volatile Markets
Monday, April 7, 2008
by Peter Shinn, The Brownfield Network
A small Nebraska grain company is out of business after its owner, Gordon Ganz, surrendered his grain handling and warehouse licenses and declared bankruptcy Friday. Ganz operated one elevator each in Alvo and Ashland with a total capacity of just over a million bushels of grain, both of which are now under the control of the Nebraska Public Service Commission.
Ganz declined to comment for this story. But state and industry officials alike told Brownfield Ganz may have been victimized by the wild market volatility created by the influx of speculative capital into commodities futures markets. And they worried this bankruptcy may be symptomatic of wider problems.
Pat Ptacek is Executive Vice President of the Nebraska Grain and Feed Association. He described Ganz as a capable businessman who had been overtaken by the changing complexion of grain futures markets.
"I've known Gordon 10 years since I've been here at the Nebraska Grain and Feed Association and in all that time I've never known Gordy to ever have a blemish on his record or even suspected of any shortage of grain that would cover his depositors' accounts," Ptacek said. "I think this is systemic of what is going on in the markets right now."
And what is going on in the markets right now is huge price swings, swings that have the potential to increase thanks to expanded daily trading limits for corn, soybeans and wheat approved by the Commodity Futures Trading Commission (CFTC) in recent weeks. Ptacek said he believes those expanded trading limits are a mistake and the CFTC should, and ultimately will, do more to limit the impact of speculative money on ag futures.
"I do believe they will very seriously look into this situation because they don't want to see the complex under this much pressure," Ptacek added.
Ptacek isn't alone in his view of the negative impact speculative capital is having on commercial participants in the grain futures markets. One who strongly agrees with Ptacek is the man responsible for taking over Ganz's elevators in Alvo and Ashland, John Fecht, Nebraska Public Service Commission Grain Division Director.
"Darn right I do," Fecht told Brownfield. "It seems to me that futures markets and everything were set up as a tool for the grain companies to protect themselves and market grain and when you get this outside money coming in that has no bearing on grain and trading of grain and can influence the market so much, it doesn't seem right to me that that can happen and should be allowed to happen," Fecht continued. "So I hope they really do take a strong look at it."
Fecht also said he's concerned the closure of the elevators in Ashland and Alvo may be just the beginning of an industry-wide crisis if grain market volatility doesn’t moderate somewhat in the months ahead. Those concerns will get a hearing on April 22nd when the CFTC holds a hearing on volatility in grain markets in Washington D.C. Representatives from the National Grain and Feed Association are expected to participate in that hearing, and according to Ptacek, the combined concerns of the entire commercial sector should motivate the CFTC to respond.
"The real players in the complex, that is the farmers, the elevators, the cooperatives and the marketers are going to be expressing their concern on the 22nd to the CFTC," said Ptacek. "Those are the people that are truly affected on the front line, and hopefully, the CFTC will take to heart their message."
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Nebraska Grain and Feed Association
1233 Lincoln Mall, Suite 200
Lincoln. NE 68508
Phone: 402-476-6174
Fax: 402-476-3401
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