Will CFTC Change Ag Futures?

[charliep]

Something else to watch. Given the large presence of the CWB in US wheat futures markets, this will also impact them.

source: http://www.agweb.com/get_article.aspx?pageid=152137

Will CFTC Change Ag Futures?
7/16/2009


Linda Smith, Top Producer Executive Editor

The Commodity Futures Trading Commission is holding trading limit hearings to determine needed changes in reporting and classification of traders, especially in the energy markets, but agriculture “and other physically delivered commodities” also “deserve thoughtful review. CFTC chairman Gary Gensler says “It is incumbent upon the CFTC to ensure a fair and transparent price discovery process for all commodities.”

CFTC will be seeking views on applying position limits consistently across all markets and participants, including index traders and fund managers. If is also examining whether the “bona fide hedging transaction” exemption that funds currently operate under (allowing them much higher position limits) should continue to apply to entities using futures to hedge purely financial risks rather than the actual use of the commodity.

“This could have a huge impact if it means a lot of investor capital leaves the markets,” says Jerry Gulke of Strategic Marketing Services.

CFTC will also be breaking out and reporting positions for more specific market players in its weekly reports, so it will be more clear what various trading categories are doing.

[cottonpicken]

Probably the worst thing that could happen to us

Their doing it to contain the inflation tsunami.

[samhill]

at least if we can identify CWB trades it would alleviate
the doubts of those who fear front running might
occur.

[samhill]

at least if we can identify CWB trades it would alleviate
the doubts of those who fear front running might
occur.

[charliep]

Here is a article about an interesting way to hedge interest rates.

source: http://www.agweb.com/TopProducer/Article.aspx?ID=152020

Hedge Your Operating Loans
7/9/2009


Linda Smith, Top Producer Executive Editor

Everywhere we turn, we hear of impending inflation and rising interest rates. If you borrow $1 million or more for operating credit, you may want to consider hedging interest rates using Eurodollar futures.

These are tied to the LIBOR (London Interbank Offered Rate) rates—which what banks use in setting interest rates, they are not currency related, says Nate Smith at Jerry Gulke’s Strategic Marketing Services. They are the single largest traded futures contract in the world, so they are very liquid; they are offered 10 years out; they protect $1 million in credit for three months. Initial margin is about $1,150.

“Say you want to protect the interest on a $1 million line of credit in 2011,” says Smith. “We would sell one March, one June, one September and one December contract.”

Because of the way they are quoted, there’s little risk of loss, because interest rates really don’t go negative, he adds.