Comment Text:
The Chicago Mercantile Exchange has issued (pending CFTC approval) an increase in spot position limits for the Live Cattle contract, Notice # MSN01-07-20. Friona Industries is very troubled by this notice, on a multitude of fronts. Primarily, the amendment is impacting listed contracts with Open Interest, moreover the alteration may have serious economic ramifications. We believe it is detrimental to contract integrity to institute changes to listed contracts with Open Interest. Furthermore, discussions with industry members and affiliates suggests that the decision was made without regard to industry participants input, and lacks justification given current deliverable supply. Friona Industries is one of the largest commercial users of the contract, and believe it is crucial to the marketplace to have a contract with integrity. We are concerned that this action is setting a dangerous precedent for CME, allowing them to act carte blanche. We would like to see the data and reasoning for the change made available, and instituted upon a newly listed contract with no Open Interest.
