WASHINGTON,
March 10, 2014 – The National Grain and Feed Association (NGFA) expressed concern
today with the Commodity Futures Trading Commission's (CFTC) proposed
regulations to establish speculative position limits for futures and swaps on
various commodities. The NGFA argued the proposal would potentially increase
speculative position limits for users of agricultural futures markets
dramatically.
In
a recently submitted statement, the NGFA said that under the CFTC's proposed
rule, "we fear that a number of common hedging transactions used for
business risk management in the grain, feed and processing sector, but not
enumerated in the proposal, could be put at risk."
In
its statement, NGFA said its members "rely on a consistent and predictable
approach to bona fide hedging and position-limit policy decisions made by the
CFTC," and that their risk-management strategies are not structured as an
investment or speculative tool. Rather, NGFA said, grain handlers,
processors, feed manufacturers, exporters and agricultural producers rely on
futures markets to manage business risk.
NGFA
said the CFTC's proposal to change the definition of what constitutes a bona
fide hedge could create uncertainty and invalidate several commonly used
hedging transactions, including locking in futures spreads, hedging basis
contracts and delayed-price commitments, and anticipatory hedging of commercial
transactions and processing or storage capacity.
To
read NGFA’s complete comments, click here.
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