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Miami port hopes to join CSC Exchange; PCCA laments Exchange's trading hours.

Miami port hopes to join CSC Exchange; PCCA laments Exchange's trading hours

The Port of Miami, a growing U.S. port for commodities, plans to make another run at trying to have its warehouses approved as delivery points by the Coffee Sugar and Cocoa Exchange.

Miami has been turned down twice before by the Exchange in efforts to get warehouses here approved as delivery points. Houston and San Francisco have also been unsuccessful.

If coffee is delivered under a contract traded on the Exchange, it must be done at warehouses in New Orleans or New York.

The presence of exchange-certified warehouses is one of the reasons that New York and New Orleans are the leading ports of entry for green coffee in the U.S., and Miami believes certification by the Exchange would boost the number of beans moving across its docks.

The Exchange has turned down Miami's request in the past because it felt it didn't need another port, but that its request would be taken up again in June.

So far, the Exchange has resisted adding delivery points because it didn't believe they would enhance trading. Rather it claimed they would complicate it since traders wouldn't know where their commodity would be delivered.

However, Carmen Lunetta, Port of Miami director, says Miami lost its last bid to become exchange certified because Exchange officials felt the port did not have enough suitable warehouse space.

"We've built literally millions of square feet since then," Lunetta says. "Coffee has always been a major import here because it's grown in the Latin American countries and South Florida has always been a large entry port for coffee. I think we're going to be successful due to our geographic position."

Port Everglades, West Palm Beach, and Jacksonville are also growing coffee ports.

Lunetta says the port, coffee importers, and the Greater Miami Chamber of Commerce plan to make a formal presentation to the exchange board of managers in June and hope for a decision this fall.

The Port of Miami is one of the top five U.S. gateways for imported coffee. Coffee, tea, and spices were Miami's third largest import, 116,900 tons, and its sixth largest export, 37,250 tons, in 1989.

Also trying to sway the Exchange is the Pacific Coast Coffee Association on the recent change in the trading hours on the Exchange.

The PCCA sent a letter to the Commodity Futures Trading Commission (CFTC) on May 22, 1989.

In its letter to the CFTC, the PCCA requested that the CFTC deny the request by the Exchange to change its coffee trading hours to 9:15 a.m.-2:00 p.m. EST, from 9:45 a.m.-2:30 p.m. EST. The PCCA believed the new hours would not only be a significant inconvenience to the West Coast trade, but even more importantly, the new hours could result in reduced trading activity.

The CFTC replied on June 29, 1989. Excerpts from the CFTC reply follow.

In its justification of the proposal, the CSCE noted that the opening time for the coffee "C" futures and option contracts was changed to 9:15 a.m. from 9:45 a.m. so that the CSCE opening would precede the re-opening of the London coffee market. The CSCF explained that, under the current trading hours, a large change in the London price when that market reopens results in confusion for traders in the ring at the CSCE, due to price uncertainties and attempts to change orders in the last couple of minutes before the opening bell. According to the CSCE, price distortion and disorderly trading can result from this situation.

According to the CSCE, the current number of trading hours is adequate for the amount of business as evidenced by the fact that there is a lull in trading in the middle of the trading session. The CSCE indicated that the changes were made based upon a recommendation of its Coffee Committee. The CSCE also stated that it considered comments received in opposition to these rule changes, particularly from traders in other time zones who objected to the decreased in the amount of trading time available to them during their normal business hours.

Under the Commodity Exchange Act ("Act") and the CFTC regulations thereunder, any exchange may change its trading hours without prior CFTC approval as long as the hours fall within "7:00 a.m.-600 p.m. local time in the city where the contract market is located." The Exchange need only give the CFTC one day's prior written notice and show that the new trading hours are not inconsistent with the "Act" and CFTC regulations.
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Title Annotation:Coffee, Sugar and Cocoa Exchange; Pacific Coast Coffee Association
Publication:Tea & Coffee Trade Journal
Date:Mar 1, 1990
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