Comment Text:
• Thousands of U.S. agribusiness firms rely on many types of hedging transactions to manage risk appropriately in their daily business 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:
o Pre-hedging purchases of producer grain outside trading hours of a futures exchange.
o 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.
