In response to recent inquiries regarding butter deliveries, please be reminded of the following requirements with respect to negotiable warehouse receipts.

A negotiable warehouse receipt is a legal document that allows transfer of ownership from the seller to the buyer and is required by the issuing warehouse in order to release the product to the new owner. 

Negotiable warehouse receipts are required for all butter delivered against CME Butter Futures contracts.  Proof of the negotiable warehouse receipt, along with the USDA grading certificate, must be submitted to CME Clearing House prior to registering a load of butter as a CME certified deliverable load.   

Negotiable warehouse receipts are not required for trading butter on the CME Spot Call market.   Butter from a futures delivery may be traded on the Spot Call.  However, subsequent buyers and sellers may not be aware of the existence of a negotiable warehouse receipt until a buyer attempts to remove the butter from the warehouse.

Therefore, it is the responsibility of the seller and the seller's clearing member firm to determine if a negotiable warehouse receipt has been issued on a load of butter prior to selling it on the CME Butter Spot Call market.  If a negotiable warehouse receipt exists, it must be submitted to the buyer along with all other required delivery documents at the time of tender. 

Questions regarding this issue may be directed to the CME Clearing House Division's Deliveries Unit 312-930-3172; or Ken Lovett, Associate Director, Market Surveillance, Market Regulation Department at 312-930-3257.