Citrus Associates of the New York Cotton Exchange: Proposed Amendments to the Frozen Concentrated Orange Juice-2 (FCOJ-2) Futures Contract Providing for Delivery of FCOJ Originating in Florida and Brazil Only, Changing the Contract's Quality Specifications and Providing for Trading of the FCOJ-2 Futures Contract at a Price Differential to the Existing FCOJ-1 Futures Contract

COMMODITY FUTURES TRADING COMMISSION

Citrus Associates of the New York Cotton Exchange: Proposed

Amendments to the Frozen Concentrated Orange Juice-2 (FCOJ-2) Futures

Contract Providing for Delivery of FCOJ Originating in Florida and

Brazil Only, Changing the Contract's Quality Specifications and

Providing for Trading of the FCOJ-2 Futures Contract at a Price

Differential to the Existing FCOJ-1 Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed amendments to contract terms

and conditions.

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SUMMARY: The Citrus Associates of the New York Cotton Exchange (CANYCE

or Exchange) has proposed amendments to the Exchange's dormant frozen

concentrated orange juice-2 (FCOJ-2) futures contract. The proposed

amendments would provide for the delivery of FCOJ originating in

Florida and Brazil only, make the contract's quality specifications

conform to the quality specifications of the FCOJ-1 futures contract,

amend the contract's speculative position limits, and provide for the

trading of the FCOJ-2 futures contract as a differential price spread

to the FCOJ-1 futures contract. The Exchange also proposes to

recommence trading in this dormant contract pursuant to the provisions

for Commission Regulation 5.2. The proposed amendments were submitted

under the Commission's 45-day Fast Track procedures which provides

that, absent any contrary action by the Commission, the proposed

amendments may be deemed approved on September 27, 1999--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 the proposed amendments are of major economic

significance, within the meaning of section 5a(a)(12) of the Commodity

Exchange Act (Act), and that their publication is in the public

interest and will assist the Commission in considering the views of

interested persons.

DATES: Comments must be received on or before September 7, 1999.

ADDRESSES: Interested persons should submit their views and comments to

Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three

[[Page 45516]]

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 CANYCE FCOJ-2 futures

contract.

FOR FURTHER INFORMATION CONTACT: Please contact John Bird of the

Division of Economic Analysis, Commodity Futures Trading Commission,

Three Lafayette Centre, 21st Street NW, Washington, DC 20581, telephone

(202) 418-5274. Facsimile number: (202) 418-5527. Electronic mail:

[email protected]

SUPPLEMENTARY INFORMATION: The Exchange currently is designated to

trade two FCOJ futures contracts, the actively traded FCOJ-1 futures

contract and dormant FCOJ-2 futures contract. The terms and conditions

of the FCOJ-1 and FCOJ-2 futures contracts are identical, except with

respect to the contracts' quality specifications. In this regard, the

FCOJ-1 futures contract provides for the delivery of FCOJ having a Brix

value of acid ratio of not less than 14.0 to 1 and not more than 18.0

to 1 and a minimum score of 94, with minimum component quality factors

of 37 for color, 37 for flavor, and 19 for defects. In contract, the

FCOJ-2 futures contract provides for the delivery of FCOJ having a Brix

value to acid ratio of not less than 13.0 to 1 and not more than 19.0

to 1 and a minimum score of 92, with minimum component quality factors

of 36 for color, 36 for flavor, and 19 for defects.

The existing terms of the FCOJ-1 and FCOJ-2 futures contracts

permit delivery of FCOJ of all origins, imported or domestic. In

addition, both futures contracts provide for the delivery of shipping

certificates, which require the certificate issuers to load FCOJ into

transportation equipment provided by the certificate holder. The

contracts' delivery points consist of approved delivery facilities

located at Wilmington, Delaware; Newark and Port Elizabeth, New Jersey,

in 11 specified counties in California; and in 16 specified counties in

central Florida. FCOJ is deliverable at par at delivery facilities

located in Florida, Wilmington, Newark and Port Elizabeth. FCOJ in

delivery facilities in California is deliverable at a discount of 10

cents per pound. Currently, a trader's combined position in the FCOJ-1

and FCOJ-2 futures contracts is subject to speculative position limits

of 3,000 contracts in all contract months combined, 1,800 contracts in

individual non-spot contract months, and 300 contracts in the spot

month.

The proposed amendments to the FCOJ-2 futures contract would limit

the origins of deliverable FCOJ to FCOJ produced in Florida and Brazil.

In addition, the proposed amendments would make the FCOJ-2 futures

contract's quality specifications identical to the quality

specifications of the FCOJ-1 futures contract, as noted above.

The proposed amendments also would provide for the trading of the

FCOJ-2 futures contract as a component of a differential price spread

between the FCOJ-2 and FCOJ-1 futures contracts (``FCOJ Differential

Contracts'') during most of the trading life of an FCOJ-2 contract

month. In this respect, the proposed amendments define a long FCOJ

Differential Contract as consisting of a long FCOJ-2 futures contract

and a short FCOJ-1 futures contract. A short FCOJ Differential Contract

is defined as a short FCOJ-2 futures contract and a long FCOJ-1 futures

contract. The FCOJ Differential Contract will be traded as a single

contract until the second business day preceding the first delivery

notice day for the expiring contract month. The proposed amendments

would provide that, on the second business day preceding the first

delivery notice day for a contract month, each FCOJ Differential

Contract position in the expiring contract month will be divided into

its component FCOJ-1 and FCOJ-2 positions, i.e., a trader will receive

by book entry a long (short) position in the FCOJ-2 futures contract

and an opposite short (long) position in the FCOJ-1 futures contract.

Trading in the FCOJ-2 futures contract will then continue until the

first delivery notice day, with the quoted prices reflecting the value

of FCOJ originating in Florida and Brazil (not the price spread

differential between the FCOJ-2 and FCOJ-1 futures contracts). Trading

in the FCOJ-2 futures contract would end on the first delivery notice

day for a contract month and all positions remaining open after the

close of trading on that day would be settled by delivery. The proposed

amendments would not change the existing trading and delivery notice

periods for expiring FCOJ-1 futures contract months.

In addition, the proposed amendments will provide for speculative

position limits of 3,000 contracts for each of the FCOJ-1 and FCOJ-2

futures contracts in all contract months combined and 1,800 contracts

for each of the FCOJ-1 and FCOJ-2 futures contracts in individual non-

spot contract months. The spot month speculative position limit would

continue to be applicable to a trader's combined gross position in the

FCOJ-1 and FCOJ-2 futures contracts.

The CANYCE intends to make the proposed amendments effective in

October 1, 1999 with the commencement of trading in the revised FCOJ-2

futures contract.

In support of the proposed amendments, the CANYCE indicated that

the proposal to trade the FCOJ-2 futures contract as a component of a

differential price spread between the FCOJ-2 and FCOJ-1 futures

contract is intended to avoid diluting the open interest and trading

activity in the FCOJ-1 futures contract. The Exchange also indicated

that proposal to divide each FCOJ Differential Contract position into

its FCOJ-2 futures contract and FCOJ-1 futures contract components two

business days before the first notice day of expiring contract months

is intended to allow traders sufficient time to adjust their futures

positions as necessary. In addition, the CANYCE indicated that, because

FCOJ that meets the proposed delivery requirements of the FCOJ-2

futures contract constitutes approximately 90% of all FCOJ currently

deliverable on the FCOJ-1 futures contract, there will be an adequate

deliverable supply of FCOJ available for the amended FCOJ-2 futures

contract.

The Division is requesting comments on the proposed amendments to

the FCOJ-2 futures contract.

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 CANYCE 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

C.F.R. Part 145 (1987)), except to the extent they are entitled to

confidential treatment as set forth in 17 C.F.R. 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 C.F.R. 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 CANYCE, should send such comments to Jean A.

Webb, Secretary, Commodity

[[Page 45517]]

Futures Trading Commission, Three Lafayette Centre, 21st Street NW,

Washington, DC 20581 by the specified date.

Issued in Washington, DC, on August 16, 1999.

John R. Mielke,

Acting Director.

[FR Doc. 99-21671 Filed 8-19-99; 8:45 am]

BILLING CODE 6351-01-M