[Federal Register Volume 60, Number 62 (Friday, March 31, 1995)]
[Notices]
[Pages 16626-16627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7971]



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COMMODITY FUTURES TRADING COMMISSION


Chicago Board of Trade: Proposed Amendment Pertaining to the 
Automatic Adjustment Procedure for Locational Price Differentials 
Applicable to Deliveries on the Soybean Meal Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed contract market rule changes.

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SUMMARY: The Chicago Board of Trade (``CBOT'') has submitted a proposed 
amendment to its Regulation 1241.01 regarding the minimum weekly 
average number of shipping certificates during a crop year that must be 
outstanding to activate the automatic adjustment procedure for the 
locational price differentials of the soybean meal futures contract. In 
accordance with Section 5a(a)(12) of the Commodity Exchange Act and 
acting pursuant to the authority delegated by Commission Regulation 
140.96, the Acting Director of the Division of Economic Analysis 
(``Division'') of the Commodity Futures Trading Commission 
(``Commission'') has determined, on behalf of the Commission, that the 
proposed amendment is of major economic significance. On behalf of the 
Commission, the Division is requesting public comment on the proposal.

DATES: Comments must be received on or before May 1, 1995.

ADDRESSES: Interested persons should submit their views and comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K 
Street NW., Washington, D.C. 20581. Reference should be made to the 
proposed amendment to CBOT soybean meal futures contract's locational 
price differentials.

FOR FURTHER INFORMATION CONTACT: Frederick V. Linse, Division of 
Economic Analysis, Commodity Futures Trading Commission, 2033 K Street 
NW., Washington, D.C. 20581, telephone (202) 254-7303.

SUPPLEMENTARY INFORMATION: The existing terms of the soybean meal 
futures contract provide for delivery of shipping certificates which 
call for delivery of soybean meal at specified CBOT-approved (regular) 
plants located in six different geographical delivery areas (delivery 
territories). The contract currently sets forth specific fixed 
locational price differentials applicable to futures deliveries in each 
non-par delivery territory.1

    \1\Currently, the par delivery area is the Central Territory 
(consists of the states of Illinois and Kentucky). The contract's 
locational price differentials for the other five delivery 
territories are: Northeast Territory (composed of the states of 
Indiana and Ohio)--$3.00 per ton premium; Mid South Territory 
(consists of the states of Tennessee, Arkansas and specified 
northern parts of Mississippi and Alabama)--$5.00 per ton premium; 
Missouri Territory (composed of the state of Missouri)--$1.00 per 
ton discount; Eastern Iowa Territory (consists approximately of the 
southeastern part of the state of Iowa)--$5.00 per ton discount; and 
Northern Territory (contains that part of the state of Iowa not 
included in the Eastern Iowa Territory)--$6.00 per ton discount.
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    The contract's existing terms also provide for annual adjustments 
to the above-noted locational price differentials based on a specified 
formula. Under the formula, the cumulative weekly average of 
outstanding soybean meal shipping certificates in a given territory 
relative to the total crushing capacity of all regular plants in that 
delivery territory for a given crop year is compared to the 
corresponding relationship for the five remaining delivery territories 
combined for the same crop year.2 For any non-par delivery 
territory, a derived ratio less than or equal to .5 (greater than or 
equal to 2.0) will result in an increase (decrease) in the price 
differential for that territory by 50 cents per ton for the next 
calendar year. For the par delivery territory (see footnote 1), a ratio 
less than or equal to .5 (equal to or greater than 2.0) will result in 
a 50-cent-per-ton increase (decrease) in the price differential for all 
other delivery territories for the next calendar year. Under the 
contract's current terms, the above-described automatic adjustments may 
be made only if the weekly average [[Page 16627]] number of outstanding 
shipping certificates for all territories combined for the crop year is 
300 or more. No changes in the locational price differentials currently 
may be made if this average is less than 300.

    \2\Under the contract's rules, all crop years end on August 31. 
All adjustments to territorial differentials based on a particular 
crop year become effective with respect to all contract months 
expiring in the next calendar year.
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    The proposed amendment would reduce to 150 from 300 the minimum 
weekly average number of outstanding shipping certificates during a 
crop year that must be observed in order to activate the contract's 
automatic adjustment procedure for locational price differentials for 
the next succeeding calendar year.
    The CBOT indicates that the purpose of the proposed amendment is to 
allow the contract's locational price differentials to reflect cash 
market locational price relationships. The CBOT indicates, in this 
respect, that reducing the minimum weekly average number of outstanding 
shipping certificates needed to permit changes in the contract's price 
differentials will allow such differentials to adjust more quickly 
toward changing cash market price differences between the contract's 
delivery territories. The CBOT notes that, while the current automatic 
adjustment feature has been in effect for three years, adjustments to 
the contract's locational price differentials were made only in 1993, 
the first calendar year in which such changes were possible under the 
automatic adjustment procedure. The CBOT further indicated that, since 
that time, no changes have been made to the price differentials, 
because the weekly average number of shipping certificates outstanding 
during the immediately preceding crop years for each of these years was 
less than 300 shipping certificates.3 According to the CBOT, if 
the standard were 150 outstanding certificates, as proposed, the above-
noted adjustment formula would have resulted in changes in the 
locational price differentials for several delivery territories during 
1994 and 1995.

    \3\The CBOT notes that a weekly average of 298 and 222 shipping 
certificates were outstanding during the 1992/93 and 1993/94 crop 
years, respectively.
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    The CBOT proposes to make the amendment effective for adjustments 
in the locational price differentials for the January 1997 and 
subsequent contract delivery months.
    Copies of the proposed amendment will be available for inspection 
at the Office of the Secretariat, Commodity Futures Trading Commission, 
2033 K Street NW, Washington, D.C. 20581. Copies of the amended terms 
and conditions can be obtained through the Office of the Secretariat by 
mail at the above address or by telephone at (202) 254-6314.
    The materials submitted by the CBOT in support of the proposed 
amendment 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 (1987)). Requests for copies of such 
materials should be made to the FOI, Privacy and Sunshine Act 
Compliance Staff of the Office of the Secretariat at the Commission's 
headquarters in accordance with CFR 145.7 and 145.8.
    Any person interested in submitting written data, views or 
arguments on the proposed amendment should send such comments to Jean 
A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K Street 
NW., Washington, D.C. 20581 by the specified date.

    Issued in Washington, D.C. on March 27, 1995.
Blake Imel,
Acting Director.
[FR Doc. 95-7971 Filed 3-30-95; 8:45 am]
BILLING CODE 6351-01-P