RECEIVED 

C.F.T.C. 

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COMMENT 

Mr. David Stawick, Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 2151 Street, NW 

Washington, DC 20581 

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Re: Proposed Revision of Federal Speculative Position Limits 

Dear Mr. Stawick, 

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December 21, 2007-~ 

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Thank you for the opportunity to present comments on the proposed revision of Federal 

speculative position limits. As one ofthe Nation's largest corn and soybean meal end 

users the market's ability to reflect accurately the demand and supply economics is 

crucial for our business and industry. We will be sending a similar response addressing 

the CFTC's proposed Risk Management Exemption from Federal Speculative Position 

Limits as it is our belief that these issues must be looked at from the combined effect as 

well as their independent impacts. 

Though our company feels that trading beyond that of producers and end users is crucial 

and healthy for the agricultural markets, we are disturbed by both the timing and size of 

the proposed change in the Federal Speculative Position Limits. Our position is clear,~ 

do not support the proposed revision gfthe Federal S_peculative oosition limits. Nor do 

we support providing exemption for Index funds and classifying them as hedgers. 

It is disturbing that at the same time our government increasingly relies on the Nation's 

corn and soybean crops to provide fuel, the CFTC is proposing these new proposals. We 

understand the CFTC and that its actions are independent of a Nation's energy policy; 

however, when taken in conjunction with the other proposed changes to Risk 

Management Exemptions from the Federal Speculative Position Limits and the paradigm 

shift in demand from energy, you are in fact creating an environment of such pure, unchecked market volatility that could be detrimental to the profitability and sustainability 

of some of the Nation's largest corn and soy complex end users. The result would be 

clearly to the contrary to Section 4a of the Commodity Exchange Act, 7 U.S.C 6a which 

states: 

Excessive speculation in any commodity under contracts of sale of such 

commodity for future delivery made on or subject to the rules of contract markets or 

derivatives transactions execution facilities causing sudden or unreasonable fluctuations 

or unwarranted changes in the prices of such commodity, is an undue and unnecessary 

burden on interstate commerce in such commodity. 

Pilgrim's Pride Corporation 

World Headquarters Park 

4845 US Highway 271 North 

Pittsburg, Texas 75686-0093 

903-434-1000 

Web: www.pilgrimspride.com 

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We feel it important that you take in consideration other outside influences prior to 

proceeding with your proposed increases in Speculative limits and exempting index fund 

traders from these speculative limits. 

Our company is a publicly traded company which is obliged to abide by the Financial 

Accounting Standards Board Statement 133 (FASB 133). The current volatility in the 

futures markets is causing further separation from the Cash markets, in which our 

company's true exposure lies. FASB 133 is complicated and burdensome. In the 

ongoing research for compliance to F ASB 133, according to our auditors, the CBOT 

Com and Soybean meal contracts are already marginal, at best, for the management of 

our cash com and cash soybean meal exposures. With increased influence on CBOT 

prices from Index funds and speculative interest we are already seeing the cash basis 

having to take on more market characteristics which was once handled within the 

confines of the CBOT. We feel the proposed changes will further separate the CBOT 

from being a tool which end users can hedge their exposures as we will see further 

breakdown in the correlation between the cash markets and the underlying futures 

contracts. 

Since January 2004, when we began to witness expansions in ethanol production and the 

explosive expansion in Index funds we have seen rather frightening increases in both 

average CBOT com prices and statistical standard deviations. These changes came 

during the same time when we have seen com production achieve record production. 

Compared to the previous 10 years, com production has increased an average of22.7% 

while the CBOT average price is up 8.7% and the standard deviation is up 16.7%. The 

change in production was needed as demand grew, but without the monumental change in 

production, price volatility would have certainly been even greater. At this writing, the 

Current March CBOT futures exceed the 2004 to present Weekly CBOT avg. price by 

well over two Standard deviations. 

Avg. Corn Corn Avg. CBOT One Standard 

Production - Weekly Closes - Deviation - Corn 

$/bu. $/bu. 

1994 ~ 2003 9.321 bil. Bu. $2.508 +/- $.60 

2004 Forward ll.435 }>il. Bu. $2.728 +1- $.71 

%Change 22.7% 8.7% 16.7% 

The CBOT Soft Red wheat market, which we are exposed to for the breading we 

purchase, has seen tremendous changes in market volatility. On the first trading day in 

2006, the CBOT Soft Red wheat market rolling 52-week average price was $3.19/bushel 

with a two standard deviation 52 week rolling price range of$2.85 to $3.53, in less than 

two years the CBOT Soft Red Wheat contract's rolling 52-week avg. price currently 

stands at $6.22/bushel with a two standard deviation 52-week rolling range of $2.99 to 

$9.46. We now have a 90% probability that prices will range between $3.00 and 

$9.50/bushel! At this time the CFTC feels this is the time to raise speculative trading 

limits by 123% and exempt index funds from the speculative trading limits. We could 

not disagree more. Instead we now have a tool which is dysfunctional for price 

discovery, budgeting and planning. 
The US agricultural commodity exchanges long stood as the price discovery mechanism 

for buyers and sellers around the globe. It was believed that such a tool could be used to 

truly hedge producer price and end user price risk while providing speculators a viable 

market. As the market stands today, we find ourselves with increased volatility, prices 

which no longer can be solely explained· by physical fundamental, cash basis which has 

to reflect more than local supply and demand and transportation cost, and tools which are 

loosing their correlation with the cash markets leaving us no viable tool to manage our 

own growing exposures. We keep looking for FASB to write provisions designed for 

commodities instead of interest rates. We keep looking for the CFTC to adhere to their 

purpose and balance the speculative interest in commodities. We keep looking for a 

voice of reason. Instead we get recommendations to increase speculative limits and 

exempt the index funds from those limits. 

The combined impact of increasing the speculative limits and exempting the index and 

pension funds from the speculative limits would leave the market vulnerable to 

unjustified, uncorrelated volatility from which only the exchanges themselves will 

benefit. End users are already studying ways to manage their exposures in other ways 

than through the exchanges, approval of these proposals would expedite that process. 

The proposals requested by the CFTC are not beneficial. The proposals are not 

warranted. The proposals should neither be accepted nor passed. 

Again, thank you for allowing us to share our comments. If you have further questions, 

feel free to contact me at edwin.carter@pilgrimspride.com or via phone at 903-434-1789. 

Sincerely, 

W. Edwin Carter 

Senior Vice-President Commodity Risk Management 

Pilgrim's Pride Corporation