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Agricultural Committee Discusses Position Limits, Hedging with CFTC

Dec 10, 2014

The Agricultural Advisory Committee of the Commodity Futures Trading Commission met yesterday to discuss, among other things, deliverable supplies of agricultural commodities as they pertain to position limits and exemptions for bona fide hedging positions.

Clay Hough, IDFA senior group vice president, is a member of the committee along with representatives from the U.S. Department of Agriculture and 34 other trade organizations, including the National Milk Producers Federation. IDFA is concerned that proposed changes restricting position limits, which would set the number of futures contracts that can be owned or controlled by one person or company, could affect dairy processors' ability to manage price risks.

Commission Reopens Comment Periods

In 2013, the Commission published the proposed rules to establish speculative position limits for 28 exempt and agricultural commodity future and options contracts, including the Class III Milk contract at the CME, and to amend existing regulations on aggregation under the Commission’s position limits regime. The Commission has now decided to reopen the comment period for both proposals for an additional 45 days.

The comment periods for the Position Limits Proposal and the Aggregation Proposal will close January 22, 2015. Comments are limited to hedges of a physical commodity by a commercial enterprise and the process for estimating deliverable supplies used in the setting of spot month limits.  

"The U.S. dairy industry has worked hard to develop the risk management capability for farmers, processors, and end-users,” said Hough. “The dairy industry is supportive of position limits for proper functioning and oversight of markets, but we are concerned with unintended consequences from the proposed rule on the dairy markets.”

Secretary of Agriculture Tom Vilsack also attended the meeting to discuss the state of the agricultural economy.  He stressed the importance of the negotiations on the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP), as well as Trade Promotion Authority,  to the continued growth of the U.S. agricultural sector.

View the presentations from yesterday’s meeting here

Members with questions may contact Hough at

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