Comment Text:
1/16/2015
Sorrells Farm Supply, Inc.
210 E. Broad St. P.O. Box 499
Raymond, Illinois 62560
Dear Sirs,
Our company has been hauling grain and livestock for farmers since 1948. We have been in the grain elevator business since 1985 in central Illinois. The company is a family business that has survived many challenges including droughts, swings in the Ag economy, and the many changes in farm programs and regulation of our industry. We felt the need to make some comments on the CFTC Speculation Position Limits/Bona Fide Hedging Definition.
• We rely on hedging transactions to manage risk in our daily operations.
• The CFTC-proposed rule unnecessarily and dramatically narrows the range of hedging transactions that would be considered bona fide hedges.
• Many hedging transactions employed for decades by the industry, and historically considered bona fide by the commission, would be outside the new proposed definition.
• In particular, anticipatory hedging is very important to our industry and must be maintained as bona fide hedging. Examples of hedging strategies that could be at risk include: Pre-hedging purchases of producer grain outside trading hours of a futures exchange. Pre-setting futures carrying charges to manage spread risk.
• Restricting the use of long-accepted strategies will increase costs of hedging for business risk management and ultimately will lead to lower bids to producers and higher consumer prices.
Regards,
President
Sorrells Farm Supply, Inc.
