Can someone explain to me how the CME works

I dont understand how the CME works and how the Cheese prices go up and down so much, i know they bid on car loads of cheese but can someone break it down for me

cheese is outta control

This is from 1995, but I don’t think the system hasn’t changed much since it was written: The National Cheese Exchange: Impacts on Dairy Industry Pricing.

Warning: .PDF file format.

As I understand it, and stated b4, we are dealing with a commodities market item, like pork bellies…many ‘things’ effect the price, such as oil/gas/corn/grain/demand/weather & market ‘trends’…

For instance, when we use more corn to make ethanol, less is available to feed livestock…simple price/demand economics…

Cheese prices rise in part, as that represents a replacement inventory cost/trend…LIFO vrs FIFO…the last in replacement cost is rising, due in part to transportation & raw production costs…

Plus, speculation drives up the cost…

I don’t really ‘play’ the commodities market, but I used to ‘play’ with options…

For what its worth…