The new contract terms calling for Florida/Brazil juice allows the futures market to price the same FCOJ product that is most predominantly traded in the cash market. Florida/Brazil juice now accounts for about 91% of the world production of FCOJ. Most of the other contract specifications (contract months, contract size, point value, trading hours, price quotation, etc.) remain the same. The FCOJ-A contract will still trade under the "OJ" symbol.
"The new Florida/Brazil origin terms help the FCOJ-A contract to provide a more efficient price discovery tool, a more reliable pricing benchmark and a stronger risk management vehicle for the citrus industry based on current industry cash market trends," said Charles H. "Harry" Falk, NYBOT's President and CEO. "By responding to changes in industry practices, our FCOJ contract market can maintain its strength and credibility and continue to serve the citrus industry effectively."
To accommodate those market users who still wish to trade a non-origin-specific contract, the NYBOT citrus market will provide a new version of the old FCOJ-1 contract, called FCOJ-B that will call for delivery of product with no specified country of origin. The FCOJ-B contract, however, will trade for most of its life (all but a day and a half) as part of a Differential Contract (the "FCOJ-Diff") versus the FCOJ-A contract. The Differential will trade until two business days before the first notice day of FCOJ-A and FCOJ-B, at which time positions remaining in an expiring FCOJ-Diff contract month after the close of trading on the last day will be "unbundled" or converted into the implied FCOJ-A and FCOJ-B futures position.
Following this unbundling, the respective FCOJ-B contract month will trade outright for the day and a half window. By allowing the expiring FCOJ-B contract month to trade until mid-day on the last trading day, all holders of such FCOJ-B positions created in the unbundling process will not be forced to enter the delivery procedure, and can instead choose to trade out of them.
The new FCOJ-Diff contract is a futures contract that represents the difference in price between an FCOJ-A futures contract and an FCOJ-B futures contract in the same contract month. A long FCOJ-Diff contract gives the buyer an implied long position in the respective FCOJ-B contract month and an implied short position in the same respective FCOJ-A contract month.
The FCOJ-Diff (symbol "OD") and the FCOJ-B (symbol "OB") will be listed for trading on Friday, February 20, 2004 along with the FCOJ-A contract. The first FCOJ-Diff and FCOJ-B contract months to be listed will be for May 2005. Options contracts based on the FCOJ-A futures contracts will also be listed for trading, beginning on Monday, February 23, 2004. Options contract terms are similar to those on the old FCOJ-1 futures contract. No options will be listed for the FCOJ-Diff or the FCOJ-B. (a complete list of the new FCOJ contract specs is available at www.nybot.com)
The old FCOJ-1 contract will continue to trade through the March 2005 expiry already listed; no new contract months will be listed for FCOJ-1. The symbol for the FCOJ-1 will remain "OJ."
NYBOT will publish separate volume and open interest figures for each of the three new contracts, which will be distributed in the same manner as the old FCOJ-1 contract information. To access prices for the FCOJ-B and FCOJ-Diff contracts, use the same vendors who carry prices for the existing contract, or access it through NYBOTLive (www.nybotlive.com), the Exchange's own price dissemination service.
NYBOT's New York Cotton Exchange/Citrus Associates launched its FCOJ-1 futures contract in 1966, and options in 1985.
The New York Board of Trade (NYBOT) is the parent company of the Coffee, Sugar and Cocoa Exchange, Inc. (CSCE) and the New York Cotton Exchange (NYCE). Through its two exchanges, NYBOT offers an expanding range of agricultural and financial products. Information about the New York Board of Trade can be found at www.nybot.com and www.nybotlive.com.
