Comment Text:
To whom it may concern,
My name is Steve Feeney, and I am the general manager of Danvers Farmers Elevator, in Danvers, IL. We are a 110 year old company who uses hedging as a part of our risk management strategy in everyday business.
Our company would like to encourage the CFTC to reconsider the proposed definition of a bona fide hedge. The definition in the proposed rule is too narrow and will eliminate many of the common tools we use to manage price risk. The industry has effectively used many of the hedging tools for decades to manage risk which would be eliminated under the proposed definition. In particular, anticipatory hedging is very important to our industry and must be maintained as bona fide hedging. Examples of other 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.
The proposed definition will restrict the use of long-accepted hedging strategies which will lead to increased costs of hedging for business risk management and ultimately will lead to lower bids to producers and higher consumer prices.
Thank you in advance for reviewing my comments.
Steve Feeney
Danvers Farmers Elevator
