[Federal Register Volume 61, Number 46 (Thursday, March 7, 1996)]
[Notices]
[Pages 9147-9149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5321]



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COMMODITY FUTURES TRADING COMMISSION


Coffee, Sugar and Cocoa Exchange: Proposed Amendments Relating to 
the Quality Standards, Delivery Ports, Packaging, Demurrage, and 
Trading Month Specifications for the White Sugar Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed contract rule change.

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SUMMARY: The Coffee, Sugar and Cocoa Exchange (``CSCE or Exchange'') 
has submitted proposed amendments to its white sugar futures contract. 
The primary amendments will: (1) Change the quality specifications by 
increasing the maximum color and moisture allowable in deliverable 
sugar, and eliminating the maximum ash content

[[Page 9148]]

standard; (2) add 52 ports to the existing list of 20 ports at which 
delivery may be made; (3) change the packaging material in which sugar 
must be delivered; (4) establish a schedule of fees payable by the 
deliverer to the receiver over and above the demurrage fees when 
vessels remain on demurrage for a period exceeding 15 days; and (5) add 
September and November and delete October from the list of delivery 
months.
    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 amendments are 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 March 14, 1996.

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. Reference 
should be made to the proposed amendments relating to changes in the 
quality, delivery ports, packaging, demurrage, and trading month 
specifications for the white sugar futures contract.

FOR FURTHER INFORMATION CONTACT: Frederick V. Linse, Division of 
Economic Analysis, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW., Washington, DC 20581, telephone 
(202) 418-5273.

SUPPLEMENTARY INFORMATION: The white sugar futures contract currently 
requires delivery of 50 metric tons of white sugar, in sound jute bags, 
meeting specified physical and chemical standards for polarization, 
moisture, ash content, and color. Delivery is effected by loading white 
sugar FOB-stowed aboard the receiver's vessel at a port selected by the 
deliverer from a list of 20 designated ports located in the European 
Community (Belgium, France, Germany, the Netherlands, and the United 
Kingdom), the United States, Poland, Korea, Thailand, and Brazil.1 
The delivery months are January, March, May, July, and October.
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    \1\ The contract's existing delivery ports are: Antwerp, 
Belgium; Rouen, France; Hamburg, Germany; Rotterdam and Flushing, 
Netherlands; Gydansk/Gdynia, Poland; Immingham, United Kingdom; 
Baltimore, Galveston, New Orleans, New York and Savannah, United 
States; Imbituba/Itajai, Maceio, Recife, and Santos, Brazil; Inchon, 
Pusan, and Ulsan, Korea; and Kosichang, Thailand.
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    The proposed amendments will change the contract's quality 
specifications for deliverable sugar by increasing to 100 from 60 the 
maximum allowable number of color units using ICUMSA test method No.4, 
increasing to .08 from .06 percent the maximum moisture content, and 
eliminating the maximum ash content standard (the polarization standard 
will not change). The amendments will also require that the sugar 
delivered under the contract shall be from the crop or season current 
at the time of shipment. Currently, the rules require that the sugar be 
manufactured within the past twelve months.
    The proposed amendments will increase by 52 the number of delivery 
ports. Under the proposal, 40 new delivery ports would be specified for 
23 countries that currently do not have delivery ports.2 In 
addition, a total of 12 new delivery ports would be added for six 
countries that currently have delivery ports.3
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    \2\ The proposed new delivery ports for the 23 new countries 
are: Porkkala and Helsinki, Finland; Lisbon, Portugal; Malmo, 
Sweden; Odessa and Nikolayev, Ukraine; Dubai, Dubai; Jeddah, Saudi 
Arabia; Mersin, Turkey; Nacala and Beira, Malawi; Durban, South 
Africa; Maputo, Swaziland; Maputo and Beira, Zimbabwe; Buenos Aires, 
Argentina; Buenaventura, Columbia; Axajutla, El Salvador; Quetzal, 
Guatemala; Vera Cruz, Manzanillo and Mazatlan, Mexico; Corinto, 
Nicaragua; Brisbane, Bundaberg, Fremantle, Mackay, Melbourne, and 
Townsville, Australia; Shanghai, Dalian, and Huangpu, China; Bombay 
and Madras, India; Penang, Malaysia; Singapore; and Iliolo, Manila, 
and Ormoc, Philippines.
    \3\ The proposed new delivery ports for specified countries that 
currently have existing delivery ports are: Calais and Le Harve, 
France; Rostock, Germany; Amsterdam and Eemshaven, Netherlands; 
Crockett, United States; Parangua and Rio de Janeiro, Brazil; and 
Bangkok and Laem Chabang, Thailand.
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    The proposed amendments will also establish a new requirement that 
a minimum of one hundred contracts be delivered for each delivery port 
designated on a delivery notice. In addition, receivers will be 
required to provide a minimum five-ton geared vessel for loading or, if 
the vessel provided is gearless, the receiver shall be responsible for 
providing loading facilities. The proposal also will require that sugar 
be delivered in woven polypropylene bags rather than in sound jute 
bags, as currently specified.
    The proposal will establish a schedule of daily fees that will 
accrue to the receiver from the deliverer, over and above demurrage, if 
the vessel is not loaded by the expiration of lay time for the declared 
vessel. The proposed schedule of daily fees, which is expressed as 
specified percentages of the daily demurrage rate that increase with 
the number of calendar days that the vessel is subject to demurrage, is 
shown below:

1st 15 days: 0% of the daily demurrage rate
2nd period of 15 days: 50% of the daily demurrage rate
All days thereafter: 100% of the daily demurrage rate.
    The proposed amendments also will add September and November to, 
and delete October from, the list of delivery months.
    The proposed amendments will give the receiver the right to observe 
the weighing, sampling, and testing procedures for the delivery sugar 
by a superintendent appointed by the deliverer.4 In addition, the 
amendments will give the receiver the right to request that another 
superintendent weigh, sample, and test the sugar if a dispute arises, 
and the decision of this superintendent shall be binding.
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    \4\ The contract's current terms require the deliverer to 
provide an internationally recognized or State superintendent to 
weigh, sample, and test sugar.
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    The CSCE intends to apply the proposed amendments only to newly 
listed contract months following Commission approval.
    In support of the proposal to specify new quality and packaging 
standards, and increase the number of delivery ports, the Exchange 
states that these changes reflect commercial practices and will 
increase the supply of white sugar available for delivery on the 
futures contract. The CSCE stated that the proposal to replace the 
October delivery month with September and November contract months will 
better serve the hedging needs of the sugar industry. The CSCE 
indicates that the proposal to require the delivery of at least 100 
contracts per port is justified because delivery of smaller quantities 
at individual ports would be relatively expensive for receivers to 
transport and would not be consistent with commercial practice. The 
Exchange also said that the proposed procedure for third party testing 
of sugar in the event of a dispute reflects commercial practice.
    On behalf of the Commission, the Division is requesting comment on 
the proposed amendments. Commenters are requested to address the extent 
to which the proposed amendments reflect commercial practices and the 
effect (if any) the proposed amendments would have on the quantity of 
white sugar likely to be economically available for delivery on the 
contract. In addition,

[[Page 9149]]

comments specifically are requested regarding the following matters: 
(1) the extent to which the proposal to permit delivery at par of all 
sugar which has a color value equal to or less than 100 color units and 
has a moisture content equal to or less than .08 percent reflects cash 
market pricing relationships; (2) the extent to which the CSCE's 
proposal to permit delivery at par at each proposed delivery port 
reflects cash market pricing conditions between each such port and all 
other existing and proposed delivery ports; and (3) the extent to which 
the proposal to require the delivery of a minimum of 100 contracts at 
each delivery port reflects commercial practices and whether it would 
act as an impediment to delivery on the contract.
    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, D.C. 20581. 
Copies of the proposed amendments also can be obtained through the 
Office of the Secretariat by mail at the above address or by phone at 
(202) 418-5097.
    The materials submitted by the CSCE in support of the proposed 
amendments may be available upon request pursuant to the Freedom of 
Information Act (5 U.S.C. 552) and the Commission's regulations 
thereunder (17 C.F.R. 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 C.F.R. 145.7 and 145.8.
    Any person interested in submitting written data, views or 
arguments on the proposed amendments should send such comments to Jean 
A. Webb, Secretary, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW., Washington, D.C. 20581 by the 
specified date.

    Issued in Washington, D.C. on February 29, 1996.
Blake Imel,
Acting Director.
[FR Doc. 96-5321 Filed 3-6-96; 8:45 am]
BILLING CODE 6351-01-P