[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]


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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.

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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\
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    \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).
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    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