[Federal Register Volume 65, Number 23 (Thursday, February 3, 2000)]
[Notices]
[Pages 5325-5326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2332]


=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION


Coffee, Sugar & Cocoa Exchange: Proposed Amendments to the coffee 
``C'' Futures Contract Reducing the Discount Applicable to the Delivery 
of Peruvian Coffee, Deleting San Francisco as a Delivery Port, Changing 
the Requirements for Bags Containing Delivery Coffee, and Amending 
Coffee Sampling Procedures

AGENCY:  Commodity Futures Trading Commission.

ACTION:  Notice of availability of proposed amendments to contract 
terms and conditions.

-----------------------------------------------------------------------

SUMMARY:  The Coffee, Sugar & Cocoa Exchange (CSCE or Exchange) has 
proposed amendments to the Exchange's coffee ``C'' futures contract. 
The proposed amendments would: reduce the discount for Peruvian coffee 
delivered in satisfaction of coffee ``C'' futures contracts from 400 
points to 100 points (from 4 cents per pound to 1 cent per pound); 
delete San Francisco, California as a delivery port; establish a 
minimum standard weight of 700 grams per bag for bags used in packaging 
deliverable coffee; permit new samples of coffee to be drawn for the 
purpose of appealing initial grading decisions regarding the coffee 
based on the first sample submitted; and change the method of 
transmitting completed and signed sampling orders to the Exchange. The 
proposed amendments were submitted under the Commission's 45-day Fast 
Track procedure which provides that, absent any contrary action by the 
Commission, the proposed amendments may be deemed approved on February 
28, 2000--45 days after the Commission's receipt of the proposals. 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 is in the public 
interest, will assist the Commission in considering the views of 
interested persons, and is consistent with the purposes of the 
Commodity Exchange Act.

DATES:  Comments must be received on or before February 18, 2000.

ADDRESSES:  Interested persons should submit their views and comments 
to Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three 
Lafayette Centre, 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 [email protected]. Reference 
should be made to the proposed amendments to the Coffee, Sugar & Cocoa 
Exchange coffee ``C'' futures contract.

FOR FURTHER INFORMATION CONTACT:  Please contact John Bird of the 
Division of Economic Analysis, Commodity Futures Trading Commission, 
Three Layfayette Centre, 21st Street NW, Washington, DC 20581, 
telephone (202) 418-5274. Facsimile number: (202) 418-5527. Electronic 
mail: [email protected]

SUPPLEMENTARY INFORMATION:  The coffee ``C'' futures contract currently 
provides for the delivery of 19 growths of coffee, including coffee 
produced in Peru, at CSCE-licensed warehouses in Miami, New York, New 
Orleans, and San Francisco. Individual coffee growths are deliverable 
at par or at specified premiums or discounts, with coffee of the growth 
of Peru presently being deliverable at a discount of 400 points (4 
cents per pound). The contract currently requires that the bags in 
which deliverable coffee is packed must be made of sisal, henequen, 
jute, burlap or

[[Page 5326]]

woven material having similar properties, with no requirements being 
specified regarding the minimum weight of such bags.
    The futures contract also requires that coffee intended for 
delivery must be sampled and graded by CSCE-licensed individuals in 
accordance with specified procedures and be certified as meeting the 
contract's quality standards. Currently, samples of coffee intended for 
certification must be taken by Exchange-licensed master samplers. The 
contract requires that, after the samples have been taken, the master 
sampler must return a signed and completed copy of the sampling order 
to the Exchange, at the time the samples are delivered to the CSCE for 
grading. In addition, if the samples of a coffee lot initially are 
found to be not deliverable or to be of lower than expected quality, 
the contract provides that the party seeking to have coffee certified 
as deliverable may resubmit the coffee samples for re-grading.
    The proposed amendments will reduce to 100 points (1 cent per 
pound) the discount for delivery of coffee of the growth of Peru and 
will delete San Francisco as a delivery point. The proposed amendments 
also will establish a new requirement that deliverable coffee must be 
packed in bags that have a minimum weight of 700 grams. In regard to 
the contract's sampling procedures, the proposed amendments will 
stipulate that the master sampler must put a copy of the signed and 
completed sampling order into the bag containing the sample and deliver 
the sample to the Exchange. In addition, the proposed amendments will 
provide that, in the case where the owner of a given lot of coffee 
appeals an initial grading decision, the owner of the coffee at its own 
expense may elect to have a new sample of the coffee drawn and 
evaluated for purposes of the appeal.
    The CSCE intends to apply the proposed amendment reducing the 
discount for delivery of Peruvian coffee to existing contract months 
that have no open interest and to all newly listed contract months. The 
proposed amendments deleting San Francisco as a delivery point and 
modifying the contract's sampling procedures would be made effective 
within 30 days of the date of the Commission's approval of the 
amendments with respect to all existing and newly listed contract 
months. The proposed amendment requiring that deliverable coffee be 
packed in bags weighing at least 700 grams would be made applicable to 
coffee certified for delivery on and after March 1, 2000.
    With regard to the proposal to reduce the discount currently 
applicable to Peruvian coffee, the Exchange said that ``[T]he physical 
market currently values Peruvian coffee at par with the Coffee ``C'' 
contract or at a premium. * * * [H]ence the Peruvian discount * * * 
needed to be narrowed from its current 400 points to 100 points to 
reflect commercial reality.'' Concerning the proposal to delist San 
Francisco as a delivery port, the Exchange said that ``[O]ver the past 
few years, there has been almost no interest on the part of the coffee 
trade to make or take delivery out of the Port of San Francisco. For 
some time, the Exchange has had no licensed warehouses in the Port.''
    In support of the proposed minimum 700-gram weight for bags used to 
package delivery coffee, the CSCE said that it has been made aware that 
Exchange coffee has been packaged in bags that easily disintegrate or 
breakdown and that the proposed standard would strengthen the integrity 
of the bags used. Regarding the proposal to permit new samples to be 
drawn on appeal of a coffee grading decision, the Exchange indicated 
that the existing rules permit appeals to be evaluated based on the 
original sample but do not provide for the submission of new samples of 
the same coffee, which may be particularly useful when the coffee has 
failed the contract's taste standard (sweet in the cup) or due to the 
presence of a few defective beans. Finally, concerning the change in 
sampling procedure, the Exchange said that requiring that master 
samplers label sample bags with a sequence number and insert the 
completed and signed sampling order in the sample bag would help to `` 
* * * avoid the appearance of a conflict of interest.''
    The Commission is requesting comments on the proposed amendments. 
In particular, comments are requested regarding extent to which 
proposed 100-point discount for delivery of Peruvian coffee reflects 
cash market pricing relationships between the value of washed Peruvian 
coffee versus washed coffee of the par coffee growths (i.e., coffee 
from Mexico, Salvador, Guatemala, Costa Rica, Nicaragua, Kenya, New 
Guinea, Tanzania, Uganda, and Panama). Comments also are requested 
regarding ordinary cash market requirements relative to the standards 
that bags used to package coffee must meet and the effect on the 
futures contract's delivery process of requiring a minimum weight per 
bag of 700 grams. In addition, comments are requested concerning the 
effect on deliverable supplies of the proposal to delete San Francisco 
as a delivery point and the effects, if any, on the delivery process of 
the proposed amendments to the contract's sampling procedures.
    Copies of the proposed amendments will be available for inspection 
at the Office of the Secretariat, Commodity Futures Trading Commission, 
Three Lafayette Centre, 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 at [email protected].
    Other materials submitted by the Exchange 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 (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 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 Exchange, 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 January 27, 2000.
Richard Shilts,
Acting Director.
[FR Doc. 00-2332 Filed 2-02-00; 8:45 am]
BILLING CODE 6351-01-M