Contract market proposals: Coffee, Sugar & Cocoa Exchange— Peruvian coffee; discount, delivery port, etc.,

[Federal Register: February 3, 2000 (Volume 65, Number 23)]

[Notices]

[Page 5325-5326]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr03fe00-56]

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 secretary@cftc.gov. 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: jbird@cftc.gov

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

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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 secretary@cftc.gov.

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. 00-2332Filed2-02-00; 8:45 am]

BILLING CODE 6351-01-M