* EU execs to deploy MiFID on commodity market speculation
* Benchmark grain futures continue to surge
* EU execs say fundamentals not only reason for price moves
* Position limits under review
By Sybille de La Hamaide and Charlie Dunmore
BRUSSELS/PARIS, Sept 20 (Reuters) - The European Commission is taking aim at growing speculation and volatility in commodity markets, using its plan to reform wider financial markets, just as EU grain futures hit contract highs on Monday.
Michel Barnier, the European Commissioner in charge of financial reform services, said at a conference that he wanted to use a planned revision of the Market in Financial Instruments Directive (MiFID) to reform commodity markets.
"The revision of MiFID is one of the key elements of an ambitious reform of the raw materials markets," the EU's financial markets chief said, stressing that commodity market regulation was high on his agenda.
"We are ready to go further. This is a key issue. We will not hesitate to consider further measures," Barnier added.
European commodity markets are under pressure to tighten regulation as the United States pushes forward with plans to tame speculative activity, blamed by some for boosting food and energy prices to record highs in 2008.
The European Commission said last week it wanted to include commodities in its upcoming revision of derivatives markets but had remained unclear on how it intended to tackle the issue of volatile commodities markets.
France, the EU's largest grain producer and main centre for European grain futures markets, on Aug. 31 urged common EU action to regulate commodity markets before it is due to head the Group of 20 economic powers.
POSITION LIMITS
EU Agriculture Commissioner Dacian Ciolos, who also attended Monday's conference, said he wanted the EU executive's plan to specifically include the issue of position limits on futures markets.
"We need to go further, especially today on the issue of position limits to counter excessive movements," he said.
"The role of the futures market is not to feed speculation and some actors' profits. The role of futures markets is to offer tools to anticipate, manage volatility and contribute to the matching of supply and demand," he said.
Volatility has been a persistent concern in recent months, with wheat gaining more than 60 percent in the five weeks to Aug. 5 on record volumes as drought-hit Russia, the world's third-largest grain exporter, banned exports.
European grain and oilseed futures powered up on Monday with wheat, maize and rapeseed prices hitting their highest level since the summer of 2008.
However, this year's surge is not expected to have the same impact on food supplies and prices as two years ago thanks to large grain stocks worldwide.
Egypt, the world's largest wheat importer, said in an interview with Reuters on Saturday it had secured enough wheat to avoid shortages in subsidised bread and would not face a rerun of riots in 2008 over bread shortages.
Still, Ciolos said that even if recent gains on wheat markets were due to fundamental supply and demand parameters, the price moves had been disproportionate.
Barnier said the MiFID review would create the opportunity to strengthen transparency, give a better framework for organised markets and increase controls on the activity of the various players in these markets, the speech said.
BRITAIN SCEPTICAL
The Commission also said it intended to review the market abuse directive and extend its field of action to strengthen how raw materials markets are controlled and supervised.
Finally, the Commission wanted the new European authority for securities markets to play an important role in how these markets operate, notably by ensuring that common rules for their functioning are established and that there is a coordinated and homogenous supervision of these rules in Europe, Barnier said.
However, there is little evidence yet of how much support the Commission will get from European member states, particularly Britain, which has shown no appetite to impose similar regulation on its exchanges.
Cocoa industry participants complained to the NYSE Euronext.Liffe exchange in July about the extent of speculation and lack of transparency in London's Liffe market, which analysts saw as a possible start for the introduction of tougher rules.
"You have to be very careful that under the guise of this, you are not actually reintroducing market control measures," Britain's junior farm minister Jim Paice told Reuters on the sidelines of an informal meeting of EU agriculture ministers near Brussels on Monday.
"I find it very difficult to see how you can put a cap on prices, because we are expecting farmers to operate closer with the global market. At the end of the day you can't buck the market," he said.
(Additional reporting by John O'Donnell and Julien Toyer and and Huw Jones in Brussels, Editing by Veronica Brown)