[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 secretary@cftc.gov.
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 flinse@cftc.gov.
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
