Comment Text:
Chairman Tarbert:
Texas Cattle Feeders Association (TCFA) appreciates the opportunity to submit comments on the proposed increase in speculative position limits to the CME Live Cattle Contract, Notice #MSN01-07-20. TCFA and its members are opposed to making the proposed changes to the contract without conducting and discussing further research from the CFTC and/or from an agreed upon university.
While hedgers have discussed various changes to the Live Cattle Contract and the CME has implemented those changes over the last couple of years, we don’t yet know how those changes will affect the contract at convergence. TCFA would recommend that the CME provide adequate time to allow the Live Cattle Contract to react to the changes in place. Furthermore, TCFA would ask that the CME not make changes to a contract with Open Interest causing additional contract uncertainty.
The CME stated that they completed market outreach regarding the amendment and that market participants were generally supportive of or indifferent to increasing the spot-month speculative limit. TCFA received many phone calls and emails registering significant displeasure with the proposed change and the lack of virtually any discussion with industry prior to implementation. Industry representatives would like to either see the CME’s research supporting this contract change or be able to research a spot-month speculative position limit increase, before changes are made.
TCFA represents cattle feeders in Texas, Oklahoma and New Mexico, and our members rely heavily on the CME contract to help manage market risk on the six million head of fed cattle that are produced and marketed each year in our region.
