[Federal Register Volume 61, Number 46 (Thursday, March 7, 1996)]
[Notices]
[Pages 9147-9149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5321]
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COMMODITY FUTURES TRADING COMMISSION
Coffee, Sugar and Cocoa Exchange: Proposed Amendments Relating to
the Quality Standards, Delivery Ports, Packaging, Demurrage, and
Trading Month Specifications for the White Sugar Futures Contract
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of proposed contract rule change.
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SUMMARY: The Coffee, Sugar and Cocoa Exchange (``CSCE or Exchange'')
has submitted proposed amendments to its white sugar futures contract.
The primary amendments will: (1) Change the quality specifications by
increasing the maximum color and moisture allowable in deliverable
sugar, and eliminating the maximum ash content
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standard; (2) add 52 ports to the existing list of 20 ports at which
delivery may be made; (3) change the packaging material in which sugar
must be delivered; (4) establish a schedule of fees payable by the
deliverer to the receiver over and above the demurrage fees when
vessels remain on demurrage for a period exceeding 15 days; and (5) add
September and November and delete October from the list of delivery
months.
In accordance with Section 5a(a)(12) of the Commodity Exchange Act
and acting pursuant to the authority delegated by Commission Regulation
140.96, the Acting Director of the Division of Economic Analysis
(``Division'') of the Commodity Futures Trading Commission
(``Commission'') has determined, on behalf of the Commission, that the
proposed amendments are of major economic significance. On behalf of
the Commission, the Division is requesting public comment on the
proposal.
DATES: Comments must be received on or before March 14, 1996.
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. Reference
should be made to the proposed amendments relating to changes in the
quality, delivery ports, packaging, demurrage, and trading month
specifications for the white sugar futures contract.
FOR FURTHER INFORMATION CONTACT: Frederick V. Linse, Division of
Economic Analysis, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW., Washington, DC 20581, telephone
(202) 418-5273.
SUPPLEMENTARY INFORMATION: The white sugar futures contract currently
requires delivery of 50 metric tons of white sugar, in sound jute bags,
meeting specified physical and chemical standards for polarization,
moisture, ash content, and color. Delivery is effected by loading white
sugar FOB-stowed aboard the receiver's vessel at a port selected by the
deliverer from a list of 20 designated ports located in the European
Community (Belgium, France, Germany, the Netherlands, and the United
Kingdom), the United States, Poland, Korea, Thailand, and Brazil.1
The delivery months are January, March, May, July, and October.
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\1\ The contract's existing delivery ports are: Antwerp,
Belgium; Rouen, France; Hamburg, Germany; Rotterdam and Flushing,
Netherlands; Gydansk/Gdynia, Poland; Immingham, United Kingdom;
Baltimore, Galveston, New Orleans, New York and Savannah, United
States; Imbituba/Itajai, Maceio, Recife, and Santos, Brazil; Inchon,
Pusan, and Ulsan, Korea; and Kosichang, Thailand.
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The proposed amendments will change the contract's quality
specifications for deliverable sugar by increasing to 100 from 60 the
maximum allowable number of color units using ICUMSA test method No.4,
increasing to .08 from .06 percent the maximum moisture content, and
eliminating the maximum ash content standard (the polarization standard
will not change). The amendments will also require that the sugar
delivered under the contract shall be from the crop or season current
at the time of shipment. Currently, the rules require that the sugar be
manufactured within the past twelve months.
The proposed amendments will increase by 52 the number of delivery
ports. Under the proposal, 40 new delivery ports would be specified for
23 countries that currently do not have delivery ports.2 In
addition, a total of 12 new delivery ports would be added for six
countries that currently have delivery ports.3
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\2\ The proposed new delivery ports for the 23 new countries
are: Porkkala and Helsinki, Finland; Lisbon, Portugal; Malmo,
Sweden; Odessa and Nikolayev, Ukraine; Dubai, Dubai; Jeddah, Saudi
Arabia; Mersin, Turkey; Nacala and Beira, Malawi; Durban, South
Africa; Maputo, Swaziland; Maputo and Beira, Zimbabwe; Buenos Aires,
Argentina; Buenaventura, Columbia; Axajutla, El Salvador; Quetzal,
Guatemala; Vera Cruz, Manzanillo and Mazatlan, Mexico; Corinto,
Nicaragua; Brisbane, Bundaberg, Fremantle, Mackay, Melbourne, and
Townsville, Australia; Shanghai, Dalian, and Huangpu, China; Bombay
and Madras, India; Penang, Malaysia; Singapore; and Iliolo, Manila,
and Ormoc, Philippines.
\3\ The proposed new delivery ports for specified countries that
currently have existing delivery ports are: Calais and Le Harve,
France; Rostock, Germany; Amsterdam and Eemshaven, Netherlands;
Crockett, United States; Parangua and Rio de Janeiro, Brazil; and
Bangkok and Laem Chabang, Thailand.
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The proposed amendments will also establish a new requirement that
a minimum of one hundred contracts be delivered for each delivery port
designated on a delivery notice. In addition, receivers will be
required to provide a minimum five-ton geared vessel for loading or, if
the vessel provided is gearless, the receiver shall be responsible for
providing loading facilities. The proposal also will require that sugar
be delivered in woven polypropylene bags rather than in sound jute
bags, as currently specified.
The proposal will establish a schedule of daily fees that will
accrue to the receiver from the deliverer, over and above demurrage, if
the vessel is not loaded by the expiration of lay time for the declared
vessel. The proposed schedule of daily fees, which is expressed as
specified percentages of the daily demurrage rate that increase with
the number of calendar days that the vessel is subject to demurrage, is
shown below:
1st 15 days: 0% of the daily demurrage rate
2nd period of 15 days: 50% of the daily demurrage rate
All days thereafter: 100% of the daily demurrage rate.
The proposed amendments also will add September and November to,
and delete October from, the list of delivery months.
The proposed amendments will give the receiver the right to observe
the weighing, sampling, and testing procedures for the delivery sugar
by a superintendent appointed by the deliverer.4 In addition, the
amendments will give the receiver the right to request that another
superintendent weigh, sample, and test the sugar if a dispute arises,
and the decision of this superintendent shall be binding.
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\4\ The contract's current terms require the deliverer to
provide an internationally recognized or State superintendent to
weigh, sample, and test sugar.
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The CSCE intends to apply the proposed amendments only to newly
listed contract months following Commission approval.
In support of the proposal to specify new quality and packaging
standards, and increase the number of delivery ports, the Exchange
states that these changes reflect commercial practices and will
increase the supply of white sugar available for delivery on the
futures contract. The CSCE stated that the proposal to replace the
October delivery month with September and November contract months will
better serve the hedging needs of the sugar industry. The CSCE
indicates that the proposal to require the delivery of at least 100
contracts per port is justified because delivery of smaller quantities
at individual ports would be relatively expensive for receivers to
transport and would not be consistent with commercial practice. The
Exchange also said that the proposed procedure for third party testing
of sugar in the event of a dispute reflects commercial practice.
On behalf of the Commission, the Division is requesting comment on
the proposed amendments. Commenters are requested to address the extent
to which the proposed amendments reflect commercial practices and the
effect (if any) the proposed amendments would have on the quantity of
white sugar likely to be economically available for delivery on the
contract. In addition,
[[Page 9149]]
comments specifically are requested regarding the following matters:
(1) the extent to which the proposal to permit delivery at par of all
sugar which has a color value equal to or less than 100 color units and
has a moisture content equal to or less than .08 percent reflects cash
market pricing relationships; (2) the extent to which the CSCE's
proposal to permit delivery at par at each proposed delivery port
reflects cash market pricing conditions between each such port and all
other existing and proposed delivery ports; and (3) the extent to which
the proposal to require the delivery of a minimum of 100 contracts at
each delivery port reflects commercial practices and whether it would
act as an impediment to delivery on the contract.
Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW., Washington, D.C. 20581.
Copies of the proposed amendments also can be obtained through the
Office of the Secretariat by mail at the above address or by phone at
(202) 418-5097.
The materials submitted by the CSCE in support of the proposed
amendments may be available upon request pursuant to the Freedom of
Information Act (5 U.S.C. 552) and the Commission's regulations
thereunder (17 C.F.R. Part 145 (1987)). 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 C.F.R. 145.7 and 145.8.
Any person interested in submitting written data, views or
arguments on the proposed amendments should send such comments to Jean
A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street NW., Washington, D.C. 20581 by the
specified date.
Issued in Washington, D.C. on February 29, 1996.
Blake Imel,
Acting Director.
[FR Doc. 96-5321 Filed 3-6-96; 8:45 am]
BILLING CODE 6351-01-P
