[Federal Register Volume 63, Number 125 (Tuesday, June 30, 1998)]
[Notices]
[Page 35564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17522]



[[Page 35564]]

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service
[Docket No. DA-98-06]


Milk in the New England and Other Marketing Areas; Determination 
of Equivalent Grade A Butter Price Series

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Determination of equivalent price series.

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SUMMARY: This document announces that the Chicago Mercantile Exchange 
(CME) Grade AA Butter Spot Call for the month minus 9 cents is an 
equivalent butter price alternative for use in computing the butterfat 
differential and the Basic Formula Price (BFP) which are used to 
establish minimum class prices in all Federal milk marketing orders. 
The CME announced that trading of Grade A and Grade B butter in the 
Butter Spot Call contract will be suspended effective June 26, 1998. 
The CME Grade A butter price currently is used to establish milk prices 
under Federal orders. The establishment of an equivalent Grade A butter 
price series is essential to the continuing operation of the Federal 
order program.

EFFECTIVE DATE: June 26, 1998.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist, 
USDA/AMS/Dairy Programs, Order Formulation Branch, Room 2971, South 
Building, P.O. Box 96456, Washington, DC 20090-6456, (202) 720-7183, e-
mail address [email protected].

SUPPLEMENTARY INFORMATION: This document provides an equivalent butter 
price series for calculation of the butterfat differential and the BFP 
which are used to derive milk prices in all Federal milk marketing 
orders (7 CFR Parts 1001, 1002, 1004, 1005, 1006, 1007, 1012, 1013, 
1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065, 1068, 
1076, 1079, 1106, 1124, 1126, 1131, 1134, 1135, 1137, 1138, and 1139). 
Currently, the CME Grade A butter price series is used to establish 
values for the butterfat differential and the BFP which are used to 
compute minimum class prices in all Federal milk marketing orders. The 
new butter price series is essential to the continuing operation of the 
Federal order program.
    The final CME Grade A butter price will be announced on June 19, 
1998, and this price will be used until June 25. However, a new 
equivalent price series needs to be effective June 26, 1998, to compute 
the butterfat differential and the BFP for the month of June and 
subsequent months. For the month of June, the butterfat differential 
and the BFP will be computed by using a simple average of the CME Grade 
A butter prices for the first 25 days (June 1 through June 25) and the 
CME Grade AA butter prices minus 9 cents for the last 5 days (June 26 
to June 30). The June butterfat differential and BFP will be announced 
on July 2, 1998. Thereafter, on or before the 5th day of each month, a 
simple average of the CME Grade AA butter prices less 9 cents will be 
used to compute the butterfat differential and the BFP for the 
preceding month.
    Pursuant to the provisions of the Agricultural Marketing Agreement 
Act of 1937, as amended (7 U.S.C. 601-674), and the applicable 
provisions of the orders, as amended, regulating the handling of milk 
in the aforesaid marketing areas, it is hereby found and determined 
that:
    (1) The CME announced that trading on Grade A and Grade B butter in 
the Butter Spot Call contract will be suspended effective June 26, 
1998.
    (2) The absolute level of the CME Grade A butter price is needed to 
determine the value of the butterfat differential and the month-to-
month change in the price level is used in the product price formula 
update component of the BFP.
    (3) Each order provides that if for any reason a price or pricing 
constituent required by the order for computing class prices or for 
other purposes is not available as prescribed in the order, the market 
administrator shall use a price or pricing constituent determined by 
the Secretary to be equivalent to the price or pricing constituent that 
is required.
    (4) The International Dairy Foods Association (IDFA) requested that 
the CME Grade AA Butter Spot Call for the month less 9 cents be used as 
an equivalent Grade A butter price. IDFA suggested that the equivalent 
butter price series become effective June 5, 1998, or as soon as 
possible. Agri-Mark Dairy Cooperative submitted a comment letter 
supporting IDFA's request and the recommended effective date. In 
addition, Michigan Milk Producers Association suggested that the CME 
Grade AA butter price less 9 cents or the formula (i.e., Grade AA 
butter price--.1342/.82) proposed by National Milk Producers Federation 
for Federal Order Reform be used as the equivalent butter price 
replacement.
    (5) The CME Grade AA butter price for the month less 9 cents should 
be used as an equivalent price for the purposes of establishing minimum 
prices under all Federal orders. The new butter price series is 
expected to yield a price generally equal to the suspended price 
series. However, in regards to IDFA's suggested effective date, the 
proper exercise of the Department's authority would require that the 
Secretary issue an equivalent price determination with an effective 
date only after the June 26 suspension of Grade A butter trading on the 
CME.
    (6) The final CME Grade A butter price will be announced on June 
19, 1998, and that price will be applicable until June 25. Therefore, 
for the month of June, the butterfat differential and the BFP will be 
computed by using a simple average of the CME Grade A butter prices for 
the first 25 days (June 1 through June 25) and the CME Grade AA butter 
prices minus 9 cents for the last 5 days (June 26 to June 30). These 
prices will be announced on July 2, 1998. Thereafter, on or before the 
5th of each month, the new equivalent price series will be used to 
compute the butterfat differential and the BFP for the preceding month.
    (7) In conclusion, the Department has determined that the CME Grade 
AA Butter Spot Call for the month less 9 cents is an equivalent Grade A 
butter price for the purposes of computing the butterfat differential 
and the BFP which are used to establish milk prices under all Federal 
milk orders. The new equivalent butter price series will be effective 
June 26, 1998.

    Dated: June 26, 1998.
    Authority: 7 U.S.C. 601-674.

Isi A. Siddiqui,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 98-17522 Filed 6-26-98; 2:24 pm]
BILLING CODE 3410-02-P