ARLINGTON, Va., Jan. 31, 2020 — The NGFA today commended the Commodity Futures Trading Commission (CFTC) for its proposal to establish speculative position limits in commodity markets, which the agency approved Jan. 30 for publication for public comment.
“This speculative position limit proposal is a significant improvement over previous versions and is the result of a lot of time and effort expended by the agency and its staff,” said Todd Kemp, NGFA senior vice president and treasurer. “NGFA is very appreciative that Chairman Tarbert and his colleagues at the CFTC have been responsive to the issues important to agricultural hedgers. The proposed rule would give authority to exchanges to make determinations regarding non-enumerated bona fide hedging strategies and hedge exemptions. Especially for grain and oilseed futures contracts, we believe that makes sense because the CME Group has the personnel and historical knowledge of markets and customers to make appropriate decisions. We’re also appreciative that the CFTC has recognized a number of hedging strategies routinely utilized by grain and oilseed hedgers as being bona fide hedging strategies, and that hedge exemptions for these enumerated strategies will not be subject to a CFTC review period.
“NGFA looks forward to working with the CFTC to ensure that all needed hedging strategies utilized by our industry to manage business risk are recognized as bona fide hedges in the final rule, and to make sure that hedge exemptions granted by CME are available for use by market participants in a timely manner. Likewise, once a rule is finalized by CFTC, we look forward to working with CME to ensure that both spot-month and non-spot month position limits are established at levels that will ensure consistent and predictable convergence of cash and futures values. This bedrock principle has made U.S. grain and oilseed futures contracts effective and efficient risk-management tools for many decades, and is essential if they are to continue to serve this indispensable role for U.S. agribusinesses and producers.”
Once published in the Federal Register, the proposed rule will be subject to a 90-day public comment period before the Commission moves toward finalizing the rule.
The NGFA, established in 1896, consists of more than 1,000 grain, feed, processing, exporting and other grain-related companies that operate more than 7,000 facilities and handle more than 70 percent of all U.S. grains and oilseeds. Its membership includes grain elevators; feed and feed ingredient manufacturers; biofuels companies; grain and oilseed processors and millers; exporters; livestock and poultry integrators; and associated firms that provide goods and services to the nation’s grain, feed and processing industry. The NGFA also consists of 34 affiliated State and Regional Grain and Feed Associations, and is co-located and has a strategic alliance with North American Export Grain Association, and a strategic alliance with Pet Food Institute.