Comment Text:
January 22, 2015
Submitted Via Commission Website
Christopher Kirkpatrick, Secretary
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW.
Washington, DC 20581
Re: RIN number 3038–AD99: 17 CFR Parts 1, 15, 17, et al., Position Limits for Derivatives and Aggregation of Positions; Proposed Rule, Federal Register/ Vol. 79, No. 233 / December 4, 2014
Dear Mr. Kirkpatrick:
This letter is in response to the Federal Register notice of December 4, 2014 regarding the Proposed Rule for Position Limits for Derivatives and Aggregation of Positions.
Glanbia Foods, Inc. manufactures and markets about 20% of all US American cheese production. We operate four cheese and three whey manufacturing plants in New Mexico and Idaho.
Glanbia has long supported the development of risk management tools for the U.S. dairy industry. These tools are a crucial part of our business operations. We have been very active users of the CME dairy futures markets for many years and rely on them for managing many aspects of our business, including milk price risk management for the dairy farms that sell us their milk. We also use the dairy futurs markets to provide longer-term product pricing for our domestic cheese customers, and in more recent years, our rapidly growing export business.
Glanbia has been actively involved in efforts of the Innovation Center for U.S. Dairy to promote industry innovation and grow sales, both domestically and internationally. We support the broader industry position supporting practical limits for proper functioning and oversight of markets, but also share the strong concerns with unintended consequences from the proposed rule on the dairy markets. We are very concerned about the potential of this proposed rule to limit the activity of liquidity providers in dairy markets when efforts are being made to increase it.
Glanbia strongly supports the Innovation Center for Dairy comments on the Proposed Rule on Position Limits for Derivatives and Aggregation of Positions.
In summary the Innovation Center comments recommend the following:
Support establishing the spot month limit for class III milk at 25% of deliverable supply, but not less than 3,000 contracts (net position and not gross position).
Do not apply the 10/2.5 formula for establishing non-spot month limits.
Instead support defining the all-months combined limit as the spot month limit multiplied by 4, but not less than 12,000 contracts.
The dairy industry has put significant effort behind developing risk management tools such as futures and options contracts at the CME. Impeding growth in those markets will result in the continued inability for our industry to use those tools. We believe that industry need for these risk management tools will continue to grow for in order for the dairy industry to manage the significant price volatility resulting from an increasingly global dairy market.
We thank you for considering our comments and recommendations.
Yours sincerely,
Daragh Maccabee
Executive Vice President & CFO
Glanbia Foods, Inc.
121 4th Avenue S
Twin Falls, Idaho, 83301
