[Federal Register Volume 63, Number 39 (Friday, February 27, 1998)]
[Notices]
[Pages 10004-10005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5059]


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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