[Federal Register Volume 63, Number 161 (Thursday, August 20, 1998)] [Notices] [Pages 44609-44610] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-22413] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION Chicago Board of Trade: Proposed Amendments to the Wheat Futures Contract Regarding Vomitoxin in Deliverable Wheat AGENCY: Commodity Futures Trading Commission. ACTION: Notice of proposed contract market rule change. ----------------------------------------------------------------------- SUMMARY: The Chicago Board of Trade (CBT or Exchange) has submitted amendments to its wheat futures contract that would permit receivers of wheat futures deliveries to require that wheat loaded out from delivery warehouses have a vomitoxin content of no more than 5 parts per million. The Commission has determined to request public comment on the proposed CBT rule based upon its finding that the proposed rule is of major economic significance within the meaning of section 5a(a)(12) of the Commodity Exchange Act (Act) and that its publication is in the public interest and will assist the Commission in considering the views of interested persons. DATE: Comments must be received on or before September 21, 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 send by facsimile transmission to facsimile number (202) 418-5521, or by electronic mail to [email protected]. Reference should be made to the CBT wheat futures contract vomitoxin proposal. FOR FURTHER INFORMATION CONTACT: Please contact Fred Linse of the Division of Economic Analysis, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, telephone (202) 418-5273, facsimile number (202) 418-5527, or electronically at [email protected]. SUPPLEMENTARY INFORMATION: Currently, the CBT futures contract contains no provisions relating to vomitoxin in deliverable wheat. The proposed CBT amendments would provide the parties that receive delivery of wheat under the futures contract may request that the wheat loaded out from the delivery warehouse contain no more than 5 parts per million of the fungus deoxynivalenol (vomitoxin). Under the proposed amendments, the delivery receiver would be required to pay for inspection of the delivery wheat for vomitoxin content, with such inspection being done at the time of load out by the Federal Grain Inspection Service or by a third party inspection service which is mutually agreeable to the delivery receiver and the deliverer. The Exchange plans to implement the proposed amendments on September 1, 1999. Under the proposed implementation plan, CBT registered warehouse receipts issued prior to September 1, 1999 will be deliverable [[Page 44610]] after that date only if the warehouse operator certifies on the warehouse receipt that the delivery receiver may request that wheat loaded out from the delivery warehouse have a vomitoxin content of no more than 5 parts per million. Holders of warehouse receipts issued prior to September 1, 1999 who request that the warehouse receipts be reissued or endorsed to comply with the vomitoxin standard will be liable to warehouse operators for a maximum of two cents per bushel as compensation for the cost of bringing delivery wheat underlying such receipts into compliance with the proposed standard. The Exchange has noted that the September and December 1999 contract months have been listed for trading with a special indicator to indicate that deliveries against these contract months be subject to the proposed vomitoxin limit, pending approval by the Commission. The price adjustment to outstanding warehouse receipts will affect their price and might have an effect on the pricing of existing positions in contract months that currently are listed for trading. The potential of a proposed rule change to affect a contract's pricing is one of the bases used by the Commission in determining whether a proposed rule change is of major economic significance within the meaning of section 5a(a)(12) of the Act and must be published for public comment under that section of the Act.\1\ --------------------------------------------------------------------------- \1\ It should be noted that section 5a(a)(12) of the Act, which requires the Commission to publish proposed rules of ``major economic significance,'' does not define the meaning of that term. Moreover, section 5a(a)(12) provides that the Commission's determination that proposed exchange rules are of major economic significance under that section is final and not subject to judicial review. The Commission staff has interpreted the meaning of ``major economic significance'' broadly as proposed rules which may have an effect on the pricing of a contract, on the value of existing contracts, on a contract's hedging or price basing utility, or on deliverable supplies. Section 5a(a)(12) does not define rules of ``major economic significance'' based upon a specific dollar impact on the economy or other such measures used in other statutes, such as those used in determining whether an agency rule is a ``major rule'' under 5 U.S.C. section 804(2). --------------------------------------------------------------------------- In support of the proposed amendments, the CBT reasons that the amendments will provide certainty to market users regarding the maximum level of vomitoxin in futures delivery wheat and will maintain the integrity of the futures contract as a pricing and hedging medium. In this regard, the Exchange notes that vomitoxin is associated with gastrointestinal illnesses in humans and animals and is subject to Federal Food and Drug Administration (FDA) advisory levels. The CBT notes that the current FDA advisory level for vomitoxin is finished wheat products to be consumed by humans is not more than 1 part per million. For animals, the advisory level is no more than 10 parts per million for cattle and chicken, with a recommendation that the ingredients not exceed 50 percent of the diet, 5 parts per million for swine, with a recommendation that the ingredients constitute no more than 20 percent of the diet, and 5 parts per million for all other animals with a recommendation that the ingredients not exceed 40 percent of the diet. The CBT indicates that the FDA determined not to specify an advisory level for raw wheat used to produce finished wheat products for human consumption, since wheat millers can reduce vomitoxin in finished products from that found in raw wheat. The Exchange notes that, in the wheat cash market, users and merchandisers purchase wheat with a maximum vomitoxin guarantee when there is concern about vomitoxin in the wheat crop or in carryover stocks. The CBT indicated that, while the maximum level of vomitoxin permitted in cash market transactions varies from year to year, the proposed level of 5 parts per million falls within the range of maximum levels accepted by buyers in recent years. The Exchange also noted that the proposed vomitoxin standard is consistent with U.S. Department of Agriculture regulations which specify a maximum vomitoxin content of 5 parts per million for wheat eligible for nonrecourse loans. Finally, the CBT notes that, by segregating inbound wheat receipts, and by blending and cleaning the wheat, warehouse operators will be able to provide for adequate deliverable supplies of wheat in crop years when vomitoxin levels are above 5 parts per million. The proposed amendments were submitted pursuant to the Commission's 45-day fast track procedures for streamlining the review of futures contract rule amendments and new contract approvals (62 FR 10434). In light of the nature of the rule and the time of year, a longer comment period is more appropriate than fast track consideration would permit. Accordingly, the CBT has requested that the proposal be removed from Fast Track consideration, and the Commission has determined to publish for public comment notice of the availability of the proposed amendments for 30 days. Copies of the proposed amendments will be available for inspection at the Office of the Secretariat, Commodity Futures Trading Commission, Three Lafayette Center, 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 telephone 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 CBT 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)), 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 the Secretariat at the Commission's headquarters in accordance with 17 CFR 145.7 or 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 CBT, should send such comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street, NW, Washington, DC 20581 by the specified date. Issued in Washington, DC, on August 14, 1998. Catherine D. Dixon, Assistant Secretary of the Commission. [FR Doc. 98-22413 Filed 8-19-98; 8:45 am] BILLING CODE 6351-01-M