[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