Source: POLITCO'S MORNING AGRICULTURE, 7/5/18

The Commodity Futures Trading Commission analyzed so-called block trades after smaller traders and commodity groups raised concerns. Its conclusion: Such products are not reducing liquidity in the market as some feared, Pro Financial Services' Patrick Temple West reports.

CME Group introduced block trades — large numbers of privately negotiated futures or options transactions — for agricultural products in January. So far, they "are a very small portion of overall volume" and are occurring where markets are liquid, the CFTC said in a report released this week. The regulatory body also said "all block trades reviewed appear to be priced within the CME rule for 'fair and reasonable' prices."

Block trade chatter: The issue is one that has frustrated some small grain dealers, who have said they reduce transparency. CME executives met with Agriculture Secretary Sonny Perdue last week and said they were holding periodic talks on the topic with the National Grain and Feed Association, a trade group that represents commercial grain handlers, Reuters reported.

But some still complain that block trades are unfairly allowing big players to trade in secret and bypass the open market. "This is the exchange catering to the big managed money accounts, and the traditional players are not relevant to them," Scott Hedin, an independent grain trader, told Reuters.

HOW SECTION 232 BECAME LAW: It's the rule that MA readers may better know as President Donald Trump's weapon of choice in an escalating trade war, but it was really intended to be a counterweight to the Soviet Union.

Pro Trade's Doug Palmer takes a fascinating look into the history of the Trade Expansion Act of 1962, which has contributed a lot of angst and anxiety in today's agricultural sectors.

When it started: When Congress passed the Trade Expansion Act of 1962, it delegated some authority to President John F. Kennedy to impose tariffs on imports to protect national security. Although Section 232, as the clause is known, may have been included at Kennedy's request, his remarks at the signing ceremony show he had little interest in imposing tariffs and was excited about engaging in negotiations to bring them down. Kennedy never even used the power before he was assassinated in November 1963.

How much has it was used before Trump: Most Section 232 investigations have been in response to a petition filed by an industry group. President Lyndon B. Johnson ordered an investigation into whether imports of watch parts and movements posed a threat to national security. The conclusion: No, they did not. Many critics contend that Trump has used Section 232 as a figleaf for protectionism, which is hardly to counter any Communist threat.