Comment Text:
I am the second generation in a family owned country grain elevator. For over forty years we have hedged our grain in the futures markets to manage price risk. We are just one of thousands of grain elevators in the United States that use hedging to manage price risk daily in our business.
We have used numerous types of hedging transactions over the years. In addition to back to back hedges, routinely we have pre hedged in anticipation of purchases while the CBOT is not trading and pre spread from one month to another to lock in a margin. These and many other hedging transactions have been used for decades by the industry. They have historically been considered bona fide by the commission. But would be outside the new proposed definition.
The CFTC-proposed rule unnecessarily and dramatically narrows the range of hedging transactions that would be considered bona fide hedges. All of the hedging transactions we use are to manage and avoid unnecessary price risk. It does not make sense to penalize the grain industry by not considering risk management strategies as a bona fide hedge. 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.
Thank You for your consideration.
