Getting bent over by the CME

How do all of you feel having your hard earned money stolen by the corruptness that they call the CME’s “cheddar block market”.
We went through a period several years ago where the market was being manipulated and rose to all time highs. It is my understanding that Dairy Farmers of America was investigated and actions were taken. Here we are again starting to watch the same old s#*t happening and I am sick and tired of laying here and taking it! Take a look at this weeks data:

Date Block
Closing Price Carloads Sold Sold on Bids or Offers Unfilled Bids Unfilled Offers
August 27 $1.6950 0 None 1 carload @ $1.6950 None
August 26 $1.6800 1 1 carload @ $1.6800 1 carload @ $1.6800 None
August 25 $1.6700 0 None 2 carloads @ $1.6700 None
August 24 $1.6525 0 None 1 carload @ $1.6525 None
August 23 $1.6475 0 None None None

As you can see we started this week at $1.6475 and by Friday we closed at $1.695. How did this happen? One truckload of cheese traded this week! Only One load. Nearly all of the cheese sold in America is priced based on this corrupt market and one 40,000 lb trade all week set the price.

It appears to me that this is how the game works. The market opened Monday this week and a few traders talked about their weekend. Nobody bid, nobody sold, the market closed shortly after. Just how long was the market open?
Tuesday One trader placed a bid. Wink, wink, nobody accepted. The market went up.
Wednesday 2 carloads were bid on. Nobody accepted, wink wink, the market went up.
Thursday 2 carloads were bid on, 1 was accepted, the market went up.
Friday one bid placed, no offers to sell, wink wink, the market goes up.

Who gets hurt when the market goes up?  Who actually buys a carload of block cheddar?  Why have we allowed the price of mozzarella cheese to be based on such a thinly traded corrupt market?  Your increases, my increases, every purchaser of cheese in America's increases are based on one $67,200. trade that took place this week.

ABSOLUTELY ABSURD.

Look, they actually had one trade today. They managed to keep the block market at 1.695. $2.00 coming soon if they have their way.

Two bids today, wink wink nobody accepts. Up another 1.5 cents today. Absolutely no trades, up another penny and a half to $1.71 to close the day. Do you think they can get it past $1.75 by the end of the week? Anybody else feel like they are getting robbed?

Yes, I feel like I’m getting robbed when the price of the cheese market increases based upon zero trades, but at least to some extent I can understand why the suppliers price is changing week by week. It is obviously FAR from a perfect benchmark for pricing cheese, but it is a benchmark. When boxes increase, all I hear is the cost of pulp increased. Where’s the market for this pulp? Does this market ever decrease? The only decrease I see on boxes seems to coincide with a change of either supplier or manufacturer. The same can be said about sauce, toppings, flour ect. I don’t know why, but at least the CME gives me the peace of mind that the cheese price is not increasing due to supplier dishonesty.

Well they managed to end the week at $1.72 today up 5 cents/pound for the week. They have manipulated the market up over $.30/lb. in the last 10 or 11 weeks. I am pissed that they are robbing me of $500/week. How much will this cost you this week? There was only one trade all week. One 40,000 pound($68,400) trade and this led to a 5 cent increase. There will probably be 40 million pounds or more of mozzarella produced this week and it will be priced based on a thinly traded market that is manipulated every week by a handful of traders. I guess we will sit back and just take it for another week. Any guesses when we will hit the $2.00 mark?

I’m paying about $2200 more per week from this same time last year. It’s not uncommon for the market to go up this time of year with school starting up. Class3 milk futures are up 50% from this time last year. I don’t think its so much a large demand thing but a short supply thing. Dairy farmers have been culling their herds or going out of business and reducing production. I would expect higher prices for another 18 to 24 months. Now that dairy farmers are making money they are going to increase their herd, but it takes around 2 years for a new born calf to produce milk. So we wait. After these calf’s are grown milk supply goes up and prices drop. Then we start all over again.

David

I know this CME manipulation is bad but its not as bad as it used to be. Back in the 90’s they could drive it .20 to .30 cents in just a day or two.

Wow, the block market dropped 3 cents today. What happened, did 3 of the 4 traders take a 3 day weekend? I think this is the first drop in several months. I had heard that there was a fraud investigation being launched. I wonder if this is the result of that? Last time DFA was investigated the price dropped close to 50 cents a pound in a matter of days, so keep your fingers crossed. Write a letter to your congressman asking for further investigation into this corrupt market. We can all use some relief from these thiefs!

Market dropped 2 more cents today. Two drops in two days! Could be a sign of things to come. Could there be indictments announced by the end of the week that might send the market freefalling down? Bring on the investigations, we’ve been getting screwed long enough!

Amen brother. I’ve never been able to wrap my mind around the cheese pricing. It’s not a seasonal crop, so why should it fluctuate so wildly? Cows make milk year 'round, you manufacture it into cheese in your plant. The variables should match that of any other manufacturing process. The up tick in the cost of doing business.

The market IS wildly manipulated by the DFA (at least that’s who was responsible last time) but there are legitimate market forces that affect the cost of cheese. It’s not a seasonal crop, but demand forces still reign. On top of that, there are a few other things that can affect the supply side like the current price of milk, butter, beef and corn. All of those, on top of demand, can alter the supply of cheese and therefore the price.

Milk prices being high are a double whammy - the input price is high and it also encourages dairy producers to sell the milk instead of make cheese out of it. Beef prices can affect the size of the dairy herd. Corn is used for feed - higher prices increase the cost of milk (on the input side). High butter prices encourage the production of more skim-milk cheese than whole milk.

Somehow the price of block cheese on the CME has increased 14.5 cents per pound so far this week without a single trade happening. There’s gotta be a better way to price cheese. Commodity prices changing based on a commodity market with zero trades is crazy.

If you guys were upset before, you probably don’t want to look at what the market has done this week. Wait until Monday so as not to ruin your weekend.

Also, order some extra cheese before your vendor reacts.

They’re raising prices ahead of Super Bowl week.

Even the cows get time off when the Packers are in the Superbowl.

Pigs take a beating for the sausage glut . . . . not even stopping to think about the outrageous surge in chicken processing in northwest Georgia, “chicken capital of the world”. Georgia’s economy gets healthy this 2-week run. Then again march madness.

As to cheese . . . it’s the brokers and distributors who allow this sort of insane piratical(?) pricing model. Just be glad the USDA hasn’t swooped in and bought up a bunch more cheese and milk at inflated prices :shock:

piratical
Not a word.

I believe you mean “free market based economy.”

Cheese market closed today 20 cents higher than last Friday. Must be the free market forces at work. Oh wait, only ONE carload of cheese was sold all week. The fact is, nobody buys block cheddar on the Chicago mercantile exchange. It is a bogus exchange used to manipulate the price of nearly all cheese sold in America.

Nick, I know you were kidding, so was I.

I knew you were, since “market” implies the actual selling and purchasing of something :slight_smile: