[Federal Register Volume 61, Number 185 (Monday, September 23, 1996)]
[Notices]
[Pages 49736-49737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24272]
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COMMODITY FUTURES TRADING COMMISSION
Chicago Mercantile Exchange Application for Designation as a
Contract Market in Ninety Percent Lean Boneless Futures, and a Proposal
To Amend and To Recommence Trading in the Dormant Fifty Percent Lean
Boneless Beef Trimmings Futures Contract
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of availability of the terms and conditions of proposed
and amended commodity futures contracts.
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SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has applied
for designation as a futures contract market in a ninety percent lean
boneless beef. In addition, the CME has submitted a proposal to amend
its dormant fifty percent lean boneless beef trimmings futures contract
and has filed a request to list new contract months for trading in that
contract. 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 of the proposals for comment 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.
[[Page 49737]]
DATES: Comments must be received on or before October 23, 1996.
ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st St. 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 CME fifty percent lean boneless beef trimmings
and ninety percent lean boneless beef futures contracts.
FOR FURTHER INFORMATION CONTACT:
Please contact Fred Linse of the Division of Economic Analysis,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
St., NW, Washington, DC 20581, telephone 202-418-5273, or electronic
mail: flinse@cftc.gov.
SUPPLEMENTARY INFORMATION: The Exchange currently is designated as a
contract market in fifty percent lean boneless beef trimmings futures.
That contract currently is dormant within the meaning of CFTC
Regulation 5.2. In addition, as noted, the Exchange has applied for
designation as a contract market in ninety percent lean boneless beef
futures.
The proposed ninety percent lean boneless beef futures contract and
the amended fifty percent lean boneless beef trimmings futures contract
would provide for cash settlement of all open positions at the
expiration of trading in each contract month.\1\ For the fifty percent
lean boneless beef trimmings futures contract, the cash settlement
price would be based on daily weighted average price and volume of
sales information reported by the United States Department of
Agriculture (USDA) for fifty percent lean boneless beef FOB Omaha in
the National Carlot Meat Report. For the ninety percent lean boneless
beef futures contract, the cash settlement price would be based on
USDA-reported daily weighted average price and volume of sales
information for ninety percent lean boneless beef FOB Omaha and East
Texas-Oklahoma. The cash settlement price for each expiring fifty and
ninety percent boneless beef contract month would be the weighted
average of the prices reported by the USDA for the last five days
immediately preceding (and including) the last trading day on which the
USDA reports both a daily weighted average price and a volume of sales
that exceeds zero.\2\
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\1\ The existing terms of the Exchange's dormant fifty percent
lean boneless beef trimmings futures contract provide for physical
delivery.
\2\ The proposed rules do not require that the cash settlement
period consist of the five consecutive days preceding and including
the last trading day of each expiring contract month. If the USDA
does not report both a weighted average price and non-zero trading
volume for one or more of the last five consecutive days that
precede (and include) the last trading day, the cash settlement
price would be calculated using price and quantity information for
the next preceding day(s) on which both the weighted average price
and non-zero sales volume are reported by the USDA.
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The trading unit for both contracts would be 20,000 pounds. The
maximum daily price fluctuation for both contracts would be $.030 per
pound, which could be raised to $.045 per pound under certain
conditions. For the fifty percent lean boneless beef trimmings futures
contract, speculative position limits would be 1,250 contracts long or
short in any contract month, except the expiring contract month, and
250 contracts as of the close of business on the fifth business day of
the contract month. Speculative position limits for the ninety percent
lean boneless beef futures contract would be 500 contracts long or
short in any contract except the expiring contract month, and 100
contracts as of the close of business on the fifth business day of the
contract month. Trading in expiring contract months would end on the
tenth business day of the spot month for both contracts.
The Exchange indicates that the futures contracts are intended to
respond to increased interest among cash market participants for
mechanisms to manage price risk in view of the growing importance of
boneless beef production and increased price volatility. In this
respect, the CME indicates that the consumption of ground beef, which
is produced by grinding boneless beef, has increased to over 50 percent
from 25 percent of all beef consumed in the U.S. since 1975. The
Exchange also notes that the yearly range of fifty-percent lean
boneless beef prices has increased to 17 cents in 1995 from 3-5 cents
per pound in the 1980s, while the annual range of ninety-percent lean
boneless beef prices has increased to 50 cents in 1995 from 3-5 cents
per pound in the 1980s. The Exchange believes that the futures
contracts will offer risk management opportunities to a wide range of
cash market participants.
On behalf of the Commission, the Division is requesting comment on
the CME's proposals. In particular, the Division is seeking comments
regarding the extent to which the proposed cash settlement prices will
reflect the underlying cash market and the susceptibility of the
proposed cash settlement prices to manipulation or distortion.
Copies of the terms and conditions will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st St. NW., Washington, DC 20581. Copies
of the terms and conditions can be obtained through the Office of the
Secretariat by mail at the above address or by phone at (202) 418-5097.
Other materials submitted by the Exchange 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 and 145.8.
Any person interested in submitting written data, views, or
arguments on the proposed terms and conditions, or with respect to
other materials submitted by the CSCE, should send such comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st St. NW., 20581 by the specified date.
Issued in Washington, DC, on September 17, 1996.
Paul Architzel,
Acting Director.
[FR Doc. 96-24272 Filed 9-20-96; 8:45 am]
BILLING CODE 6351-01-M
