THE NEW YORK COMMODITIES PROBE : A LOOK AT THE FUTURES

As part of an investigation by the Commodity and Futures Trading Commission, yesterday the Postal Inspection Service served search warrants on the New York Mercantile Exchange and Commodity Exchange. Two other New York exchanges--the Coffee Sugar and Cocoa Exchange, which trades future and options contracts in coffee, sugar and cocoa, and the Cotton Exchange that trades future contracts on cotton and frozen orange juice--are also part of the investigation. A futures contract involves the purchase or sale of a specific commodity at a set time in the future. Here is a look at some of the items traded on the New York Mercantile Exchange and Commodity Exchange. New York Mercantile Exchange (NYMEX) PALLADIUM: Palladium is often used in place of platinum because it is cheaper, harder, and lighter than platinum. Palladium is gaining market share in dental applications and is also used in ceramic capacitors and integrated circuits. PETROLEUM: Most crude oil is refined into gasoline, heating oil and other fuels. The remainder is converted into lubricants and raw materials such as asphalt, coke, industrial hydrogen and wax. Futures in crude oil, heating oil, and unleaded gasoline are traded on the New York Mercantile Exchange. Heating oil is also traded on the London Commodity Exchange, where it is called gas oil. PLATINUM: More valuable than gold, platinum is a favorite metal for expensive jewelry. Because platinum is resistant to heat and chemicals, it is used by the automotive industry in catalytic converters, by chemical laboratories for containers, by the glass industry to make dies for fiberglass, and in making surgical instruments. In addition to the NYMEX, futures are traded on the Tokyo Commodity Exchange for Industry. PROPANE: Liquified propane is mixed with butane to produce liquified petroleum gas (LPG), which is used as fuel in industry, trucks, and homes in isolated areas. Propane is an important source of ethylene, a colorless flammable gas and one of the most important industrial chemicals. Commodity Exchange in New York (COMEX) ALUMINUM: Because pure aluminum is soft and has little strength, it is almost always mixed with other elements such as copper, magnesium, and zinc to form aluminum alloys. A versitile metal, more aluminum is used worldwide than any other metal except iron or steel in products ranging from window frames and siding to airplanes and automobiles to beverage cans and golf clubs. Aluminum futures are also traded on the London Metal Exchange. COPPER: Used for everything from rain gutters for houses to electronic guidance systems for space rockets, copper--as the best low-cost conductor of electricity--is heavily used in the electrical industry. Copper can be combined with other metals to create brass and bronze. Futures are also traded on the MidAmerica Exchange in Chicago. Cash and futures are traded on the London Metal Exchange; options are traded in both New York and London. GOLD: Jewelry consumes almost half of gold used in the U.S., with New York being one of the centers of U.S. jewelry manufacturing. Other uses for gold include electronics and other industrial applications, dental. About 1 percent of gold is formed into small bars and privately minted investment items such as gold coins. Gold futures and options are traded on the Commodity Exchange COMEX in New York. Futures are also traded on the Chicago Board of Trade, the Chicago International Monetary Market, and on commodity exchanges in Winnipeg, Sydney, and Hong Kong. SILVER: The major silver consumer is the photography industry. Used in electrical and electronic products for contacts and conductors, silver is also used in batteries, sterling tableware, jewelry, mirrors, coins, for medical and dental uses, and in brazing alloys and solder. Silver futures are also traded on the Chicago Board of Trade, the MidAmerica Exchange, the London Metal Exchange, and in Winnipeg.