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[Federal Register: February 27, 1998 (Volume 63, Number 39)]
[Notices]
[Page 10004-10005]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27fe98-50]

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COMMODITY FUTURES TRADING COMMISSION


Proposed Amendments to Chicago Mercantile Exchange Butter Futures
Contract Regarding Locational Price Differentials

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed amendments.

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SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has proposed
amendments to Chicago Mercantile Exchange butter futures contract which
will revise the contract's locational price differentials. The proposal
was submitted under the Commission's 45-day Fast Track procedures. The
Acting Director of the Division of Economic Analysis (Division) of the
Commission, acting pursuant to the authority delegated by Commission
Regulation 140.96, has determined that publication of the proposals for
comment is in the public interest, will assist the Commission in
considering the views of interested persons, and is consistent with the
purpose of the Commodity Exchange Act.

DATES: Comments must be received on or before March 16, 1998.

ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW Washington, DC 20581. In
addition, comments may be sent by facsimile transmission to facsimile
number (202) 418-5521, or by electronic mail to

[[Page 10005]]

[email protected]. Reference should be made to the CME butter
contract.

FOR FURTHER INFORMATION, CONTACT: Please contact John Bird of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581,
telephone (202) 418-5274. Facsimile number: (202) 418-5527. Electronic
mail: [email protected].

SUPPLEMENTARY INFORMATION: Under the existing butter futures contract,
delivery may be made from approved domestic facilities located within
the 48 contiguous states of the U.S. The par delivery area includes
Chicago and all locations east of the western boundaries of lower
Michigan, Indiana, Kentucky, Tennessee, and Mississippi. Deliveries
outside the par delivery area currently are subject to discounts which
increase by $.005 per pound for every 400 miles west of Chicago,
beginning at $.005 for locations up to 400 miles outside Chicago, and
ending at $.025 per pound for locations beyond 1600 miles.
    Under the proposed amendments, the futures contract's par delivery
location will consist of Chicago only. All other locations would be
subject to discounts based on the following schedule: (1) locations up
to 400 miles outside Chicago, at a discount of $.010 per pound; (2)
locations between 400 and 800 miles outside Chicago, at a discount of
$.020 per pound; (3) locations between 800 and 1200 miles outside
Chicago, at a discount of $.025 per pound; (4) locations between 1200
and 1600 miles outside Chicago, at a discount of $.030 per pound; (5)
locations between 1600 and 2000 miles outside Chicago, at a discount of
$.040 per pound; and (6) locations greater than 2000 miles outside
Chicago, at a discount of $.045 per pound. The CME proposes to apply
the amendments to all newly listed contract months, commencing with the
February 1999 contract month.
    The Exchange states that the current price differentials "no
longer accurately reflect the true level of price differentials that
exist during the majority of the year and are no longer based on the
majority of cash butter transactions that occur in locations outside of
Chicago." The CME indicated that the proposed par delivery location
and locational price differentials for alternative delivery points were
selected based on the Exchange's analysis of quoted cash butter price
differences between Chicago and California, prevailing transportation
rates for shipping butter from West Coast locations to Chicago, and
information obtained from industry sources. The Exchange also notes
that the proposed locational price differentials conform to the
locational differentials specified for the Exchange's spot call market
for butter.
    The proposed amendments were submitted pursuant to the Commission's
Fast Track procedures for streamlining the review of futures contract
rule amendments (62 FR 10434). Under those procedures, the proposal,
absent any contrary action by the Commission, may be deemed approved at
the close of business on April 6, 1998, 45 days after receipt of the
proposal. In view of the limited review period provided under the Fast
Track procedures, the Commission has determined to publish for public
comment notice of the availability of the terms and conditions for 15
days, rather than 30 days as provided for proposals submitted under the
regular review procedures.
    The Commission is specifically requesting comment on the extent to
which the proposal conforms to the Commission's policy on the
establishment of locational price differentials. That policy provides
that locational price differentials specified in futures contracts
should reflect normal commercial price differences between the delivery
points specified for the contracts. When cash market conditions result
in unstable price relationships among delivery points, the policy
provides that locational price differentials be set at levels that fall
within the range of values commonly observed or expected to occur in
the future.
    Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.
Copies of the proposed amendments can be obtained through the Office of
the Secretariat by mail at the above address, by phone at (202) 418-
5100, or via the internet on the CFTC website at www.cftc.gov under
"What's Pending".
    Other materials submitted by the CME in support of the proposal may
be available upon request pursuant to the Freedom of Information Act (5
U.S.C. 552) and the Commission's regulations thereunder (17 CFR Part
145 (1997)), except to the extent they are entitled to confidential
treatment as set forth in 17 CFR 145.5 and 145.9. Requests for copies
of such materials should be made to the FOI, Privacy and Sunshine Act
Compliance Staff of the Office of Secretariat at the Commission's
headquarters in accordance with 17 CFR 145.7 and 145.8.
    Any person interested in submitting written data, views, or
arguments on the proposed amendments, or with respect to other
materials submitted by the CME, should send such comments to Jean A.
Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette
Centre, 21st Street NW, Washington, DC 20581 by the specified date.

    Issued in Washington, DC, on February 23, 1998.
John R. Mielke,
Acting Director.
[FR Doc. 98-5059 Filed 2-26-98; 8:45 am]
BILLING CODE 6351-01-P
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