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Minneapolis Grain Exchange ready for frozen shrimp futures, options trading.

The magnitude of the world-wide shrimp industry and the sizable volume of consumption of this crustacean in the USA provide sufficient justification for the recent action of the Minneapolis Grain Exchange (MGE) in establishing a centralized facility for openly trading shrimp futures contracts.

The growth in volume of imported cultured shrimp during the past decade or so has had a significant bearing on the decision to create a program for shrimp futures and options. During 1992 domestic production of tropical shrimp in the United States totaled about 144 million pounds (head-off) while imports from as many as 20 countries increased to 595 million pounds (product weight), much of which was cultured shrimp (sizes 31/40, 41/50 and 51/60).

An article in the April issue of Quick Frozen Foods International discussed the proposed action by the MGE in anticipation of the approval by the Commodity Futures Trading Commission (CFTC) which was obtained in time for the opening of trading on July 12.

The success of the MGE program is dependent upon the number of shrimp industry members who use it, on one hand, and the financiers and professional traders prepared to speculate on the future price of shrimp on the other hand.

The MGE futures trading program should be looked upon favorably by members of the shrimp industry who have a financial interest in producing, processing and marketing shrimp -- not just within the United States, but also within those countries which export shrimp to the USA. Clearly, the MGE program provides a method for producers, processors, exporters, importers and others desiring protection against volatile shrimp prices to insure against losses due to fluctuations in market prices.
United States Shrimp Imports(*)

(Millions of Pounds - Product Weight)

January - December

Origin/Type Shell-on Peeled

Ecuador 92.6 28.0
Thailand 65.2 30.8
China (PR) 67.6 41.2
India 2.3 36.4
Indonesia 21.0 8.8
Mexico 25.3 4.8
Bangladesh 14.4 4.0
Honduras 11.2 5.6
Panama 6.3 5.7
Brazil 7.8 4.3
Philippines 8.3 0.9
Others 29.8 44.7

Total 351.8 215.2

Source: LMR Shrimp Market Report - February 1993;

(*)Does not include other forms such as canned = 28.4.

To introduce such an important undertaking as futures trading to an international industry unaccustomed to the use of such a "hedging" mechanism to reduce risk, MGE sponsored seminars in nine locations throughout the USA earlier this year. Ample literature was provided which explains in detail the procedures necessary to enter into the program. Interested brokerage houses have also contacted prospective clients who might participate in the program.

The basis for all transactions at the MBE are the Frozen Shrimp Futures Contract and the Frozen Shrimp Options Contract. The contracts were written with the help of qualified members of the shrimp industry who had previous experience in hedging in other commodities. Specifications of these contracts are outlined within this article.

Adapting the trading of shrimp futures to a system modeled after those successfully operating for other commodities undoubtedly will require several months. The program will be tested by many skeptical producers, processors, exporters, importers and others.

The benefit to the industry resulting from the publication of current and future shrimp prices in periodicals such as The Wall Street Journal (which run similar information about other foods such as cocoa, coffee, orange juice and sugar) is inestimable. International wire services may also carry such information to shrimp producing countries as well as the major markets of Europe and Japan.

In the opinion of this writer, the shrimp industry needs the Minneapolis Grain Exchange futures trading program. All those interested in improving the industry may request information direct from the Exchange by phoning (612) 338-6212, or faxing (612) 339-1155. A list of appropriate brokers is included in the material.

York Food Systems Targets Seafood Turnkey Projects

York Food Systems, the in-line freezing and refrigeration equipment division of York International, has established a shrimp/seafood specialty division to provide complete turnkey production facilities for international clients.

With offices in the USA, UK and New Zealand, York has engineering, manufacturing and technical services avilable to design, coordinate and implement shrimp and seafood projects from inception to final marketing. Capabilities include feasibility studies, facility design, technical services and turnkey project development. The company's seafood technical staff can prepare budgets, design facilities and process lines, establish schedules, assist with equipment selection, supervise installation and start-up, and train operational staff.

International Seafood Conference Takes a Slow Boat to Bangkok

After 15 years as a mostly European institution, with one detour to Japan and a short hop to Morocco, the International Seafood Conference travels to exotic Thailand this year for its sixteenth session.

The Royal Orchid Sheraton Hotel & Towers in Bangkok, located on the banks of the Chao Phraya (River of Kings), is the site of the conference, set for Nov. 28-Dec. 1. Visits to shrimp farms and tuna, fish and shellfish plants are part of the agenda.

Those tours are actually set for Dec. 2, the day after the conference, so nobody will have to miss any of the sessions. There will be three days of business sessions; the first day will be devoted to Thai Fisheries and a World Shrimp Seminar, the second to World Resources (including groundfish), and the third to World Marketing (especially Asian products).

Registration is $800 a head until Sept. 15, $850 after Sept. 15 and $900 at the door ($300, $350 and $350 for spouses). Royal Orchid accommodations start at $160 a night at the Hotel and $220 at the Towers for singles, and range up to $280 and $360 for executive and theme suites. All rooms and suites command panoramic views of the river, and the site is close to the Grand Palace and the Temple of Dawn.

For more information, contact the International Seafood Conference office at P.O. Box 108, Bliss, ID 83314, USA; telephone 208-352-4351/4460, fax 208-352-4271.

Thai-Vietnam Joint Venture Could be Facing Liquidation

The board of directors of Thai-Vietnam Fisheries Co. Ltd. was expected to meet in late June to consider closing down the two-year-old joint venture that has yet to do any business.

Anak Sukputi, president, reportedly became dissatisfied with the partnership after Vietnam recently decided to limit its fishing areas and to exact a service charge and taxes for the whole year rather than every time boats fish in Vietnamese waters. If the agreement's original provisions are not reinstated, he will likely as the board to liquidate the company.

Annual Sea Fare Exposition In Fort Lauderdale, Florida

Fort Lauderdale, Florida, the spring break capital of the United States for college students, will be the autumn business capital for the ninth annual Sea Fare Americas trade show Sept. 29-30.

Held in conjunction with the South Florida Foodservice Expo, the show, based at the Fort Lauderdale Convention Center, will feature a culinary competition with chefs whipping up their best seafood recipes.

For more information, contact Sea Fare Expositions, 850 NW 45th St., Seattle, Wash. 98107, USA; telephone 206-547-6030, fax 206-548-9346.

Iceland Seafood Co-Packing For Loftis-Devitt Company

Iceland Seafood Corp. of Camp Hill, Pa., USA, has entered into a co-packing arrangement to produce frozen breaded fish products for Loftis-Devitt Company, Inc. Headquartered in Annapolis, Maryland, the latter firm is one of two suppliers of Filet-O-Fish portions to McDonald's Restaurants in the United States.

Shrimp World Conference, Merchandising Meeting Set

The Shrimp World V Conference is scheduled for Oct. 2-6 at the Sheraton Place Hotel, San Francisco, Calif. Among the speakers confirmed thus far are:

Dr. Jan-Lung Chuang of Taiwan Grand Asia, who will address production in China; Dr. Henri de Saram, director of Infofish, Kuala Lumpur; Malaysia; Olivier Hottlet, president of Pierre Hottlet Co., Kontich, Belgium; John Filose, vice president of Ocean Garden Products, San Diego, Calif.; Rick Martin, president of Meridian Products, Santa Fe Springs, Calif.; Kres Muenzmay, president of Red Lobster Inns, Orlando, Fla.

For more details, contact the New Orleans-based organizer by phoning 504-368-1571, or faxing 504-368-1573.

Speaking of New Orleans, the Crescent City's Royal Sonesta Hotel will host the Food Marketing Institute's seventh annual Seafood Merchandising Conference Oct. 10-13. Registration information is available by phoning the Washington, DC-based FMI at 202-452-8444, or faxing 202-429-4519.

Frozen Shrimp Futures: Contract Specifications

Trading Hours: 9:40 a.m.-1:30 p.m. (Central Time)

Contract Unit: 5,000 pounds

Delivery Months: March, June, September and December.

Minimum Price Fluctuation: 1/4 cent per pound or $12.50 per contract.

Maximum Daily Price Fluctuation: $.15 per pound or $750 per contract. Subject to variable price fluctuation limits.

Speculative Position Limits: 600 contracts all months combined; 300 contracts any single month; 150 contracts spot month as of the business day preceding first notice day.

Deliverable Grades: Raw, frozen blocks of headless white shrimp with shell on that is of a single brand -- produced and packed by a single packer in the Western Hemisphere -- of size count 41-50 per pound deliverable at par. Discounts and premiums apply to permitted non-par sizes between 31-35 and 61-70 count. Raw, headless shrimp that is produced and packed in the People's Republic of China in frozen blocks with shell on is deliverable at specified discounts and premiums for permitted size counts. All delivered shrimp must meet United States Department of Commerce technical standards for U.S. Grade A Shrimp.

Delivery Points: Exchange approved facilities in regions of Miami, Tampa, or Brownsville, Texas, at par. Discounts and premiums apply to the non-par Exchange approved facilities in the New York/New Jersey port area and Los Angeles area.

Frozen Shrimp Options: Contract Specifications

Last Trading Day: No futures contracts calling for delivery in the current month shall be made during the last seven business days of such month, and the business day preceding these seven days during which trading is prohibited shall be call the "last trading day."

Trading Hours: 9:45 a.m. to 1:40 p.m. (Central Time) except on the last day of trading in an expiring option, when trading shall terminate at 1:00 p.m. (Central Time).

Underlying Asset: One Minneapolis Grain Exchange Frozen Shrimp futures contract (5,000 pounds).

Contract Months: March, June, September and December.

Minimum Price Fluctuation: 1/8 cent per pound or $6.25 per contract.

Maximum Daily Price Fluctuation: $.15 per pound (same as underlying futures contract). Subject to variable price fluctuation limits.

Speculative Position Limits: 600 futures-equivalent contracts all contract months; 300 futures-equivalent contracts any contract month; 1,200 option contracts any contract month.

Last Trading Day: The last day of trading will be the last Friday which precedes by at least five business days, the first notice day for the corresponding shrimp futures contract. If such Friday is not an Exchange business day, the last day of trading shall be the preceding business day.

Exercise: The buyer of a shrimp futures option may exercise the option on any business day prior to the expiration date by giving notice of exercise to the clearing house by 4:00 p.m. (Central Time) on such day.

General Mills is Closing 27 Red Lobster Outlets

General Mills Inc., Minneapolis, Minn., USA, has announced plans to shut down 27 Red Lobster restaurants. About half are said to be situated in economically depressed locations in Canada. In the United States, the closures will take place in areas where more than one General Mills-owned restaurant is doing business.

The closings are reportedly in line with a strategy to offset the impact of expected new US federal tax and health care policies. Meanwhile, Red Lobster will still operate almost 600 units in North America which will serve about 78 million pounds of seafood to 138 million customers this year. The company also runs 50 outlets in Japan through a joint venture with Jusco.
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Title Annotation:includes related articles
Author:Branstetter, Henry R.
Publication:Quick Frozen Foods International
Date:Jul 1, 1993
Previous Article:Europeans warm up to frozen fish as recession dampens fresh market.
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