To be eligible for delivery on the Chicago Mercantile Exchange, butter shall be graded by a USDA grader and registered with the CME Clearing House.   Butter shall not have been produced or stored prior to December 1^st of the previous year.  A delivery unit may vary between 40,000 and 43,000 pounds.  Each delivery unit will be stored and completed within a 15-day period under one lot number and must be continuously stored in one approved cold storage warehouse.  Commencing on the 30^th calendar day after the date of manufacture of the earliest churning in the carlot, the butter must be held at 0 degrees Fahrenheit at the approved cold storage warehouse.

To initiate delivery of a Butter contract, the seller�s clearing firm must submit to the CME Clearing House, by 1:00 p.m. two business days before delivery, a Written Delivery Notice on a form prescribed by the Exchange.  The seller�s clearing firm must provide by 12:00 p.m. the business day following intent, an Official Exchange Certificate issued by the CME Clearing House, a USDA grading certificate, Negotiable Warehouse receipt and a copy of the Warehouse Transfer Form .

ASSIGNMENT

Upon receipt of a sellers� Delivery Notice, the CME Clearing House will assign deliveries to the oldest long positions.  Clearing Firms are reminded that adjustments to their long positions are due to the Clearing House by 2:00 p.m. 

Delivering and receiving firms will receive a Butter Delivery Assignment Report, detailing butter contract delivery information.  Reports will be sent to Clearing firm�s mailboxes located at 2 South Tower, Data Processing Department.

The following is an explanation of butter carlot information on delivery assignment reports:

1)                  Tender Day � Current Date

2)                  Delivery Day � Two business days following tender day.

3)                  Storage Paid through - Date through which seller must pay storage charges (Second business day following delivery day).

4)                  Buyer/Seller � Firm Name

5)                  Settlement Price � Current Day Settle

6)                  Warehouse Code � CME assigned code (Located on Warehouse Storage Rate Form)

7)                  Warehouse Name � CME approved Warehouse where the butter is stored.

8)                  Storage Lot Number

9)                  Warehouse certified weight as reported on USDA grading certificates.

10)               Storage Date � The date butter was accepted into the warehouse.

11)               Contract Value = Net weight x Settlement price.

12)               Delivery Allowance � Out of town delivery allowance

13)               Storage Charge

14)               Pay/Collect Amount

Example of a Delivery:

Tender Date: February 5, 2001               Delivery Date: February 7, 2001

Seller will assume storage charges through: February 9, 2001

Butter in Storage: January 10, 2001         Net Weight: 41,667 lbs.

INVOICING PRICE:

41,667 lbs. X 1.15 settlement price = $47,917.05 contract value

STORAGE CHARGES:

The seller will assume storage charges up to 5:00 p.m. on the second business day after the date of delivery.  The buyer will be responsible for the remainder of the storage month.  If delivery occurs on Thursday, Friday or a holiday, the seller�s responsibility includes the weekend.  

Storage is always based on a 30-day month.  If a month has 31 days, we do not count the last day for storage calculations; for February, which has 28 days, two days are added. 

All storage rates are rounded up to the nearest nickel.  If the storage rate for one day is $11.20, the rate would be rounded to $11.25.

Seller assumes storage charges through: February 9, 2001

Butter in Storage: January 10, 2001         Net Weight: 41,667 lbs.

41,667 lbs. X .0080 (Storage rate) = $333.33

$333.33 / 30 days = $11.112 (Round up to the nearest nickel)

$11.15 per day

$11.15 x 0 days = $0; a storage refund due seller

Storage charges are paid one month in advance by the seller. The prorated share calculated by the Clearing House due from the buyer shall be added to and shown on the tender notice.  The seller will bear all charges for handling before the date of tender.  The buyer will bear all charges incurred afterwards.

OUT OF TOWN DELIVERY ALLOWANCE:

41,667lbs (net weight) x  $0.025 (futures discount) = $1,041.68 out of town delivery allowance

TOTAL INVOICING PRICE:

$47,917.05 Contract Value

                -1,041.68 Out of Town Delivery Allowance

$46, 875. 37 Total amount due CME

PAYMENT

The assigned buyer must deposit with the CME Clearing House by 12:00 p.m., the total invoice price on the first business day following tender day.  Payment should be wire transferred to:

                         Harris Bank

                        CME Delivery Account

Account Number   215-550-5

DELIVERY DAY

Upon receipt of the buyer�s payment and the seller�s fulfillment of the delivery, the CME Clearing House will release the following: Negotiable Warehouse Receipt, Official CME Certificate, USDA Inspection Certificate and a copy of the Warehouse Transfer Form to the buyer.   A wire transfer of funds will be made to the seller according to their wiring instructions.

*Please Note: Upon delivery, the seller�s clearing firm should forward a Warehouse Transfer/Release form to the appropriate warehouses, to ensure change of ownership.

 Please check for accuracy on all delivery reports, and report discrepancies to the CME Clearing House immediately.

 If there are any questions regarding the butter futures� contract, please contact Morgan Culverhouse, Manager, Deliveries and Fulfillment Systems, at (312) 930-2892 or Linda Elliott, Deliveries Supervisor, at (312) 930-3174.