London, 16 September 2011: Reuters

Agribusiness Cargill has come out in support of the introduction of delivery limits on NYSE Liffe softs contracts, an issue which the exchange is currently exploring. Delivery limits on Liffe softs contracts "would be a step in the right direction", Paul Naar, head of food ingredients in Europe, Middle East and Africa (EMEA) for Cargill, told Reuters on Thursday.

Earlier this week NYSE Liffe announced it is consulting with participants in its robusta coffee, cocoa and white sugar markets over the potential for the introduction of delivery limits on the spot months.

European commodity markets are under pressure to tighten regulation as the United States pushes forward with plans to curb speculative activity, blamed by some for boosting food and energy prices to record highs in 2008.

Some European cocoa industry participants also sent a letter to NYSE Liffe last year complaining about the extent of speculation in the London market and a lack of transparency. Naar said the London cocoa futures market was a particular example of where the futures contract was not a reflection of the physical market and was vulnerable to disconnections between these values.

He noted a lack of transparency and specifications of the futures contracts as partially responsible for any lack of convergence between futures and physical prices. The New York-based Intercontinental Exchange ( ICE) is more heavily regulated than the London Liffe soft commodity markets, providing a weekly position report and enforcing position limits.

"Some of the problems we (Europe) have don't exist in the U.S.," said Naar.

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