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Dairy futures

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rgjujitsu

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You all have been so generous and forthcoming with advice I would like to publicy offer what little help I can. I currently trade commodities on the floor of the chicago mercantile exchange. a close friend is an order filler in the dairy futures and options. if anyone would like to hear any opinions or anything that would be helpful i would be glad to ask him. nothing illegal of course. my parents always said never show up empty handed so this is what I have to bring to the party, that and my stunning good looks! Thanks again for everything, you all have been so helpful.
 
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Cheese prices are at an all time high. How is it that they can go weeks without filling offers? It would be nice to see them fulfill some offers and get the price down.
 
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This was his response. PRobably after a few beers so if you want more specific detail let me know.“Prices are easily influenced by the Bigs. Right now, like every other commodity, it’s skyrocketing”
 
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Contract size is 40,000 lbs. comes in 40lb blocks. If someone wanted to they could hedge their risk using options. If you are worried about further price increases. I’m not a broker but if someone had speCific questions about it I’d be glad to.
 
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Missy PMQ:
Isn’t cheese still traded daily regardless?
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The problem is that the price of cheese nationwide seems to be set based upon the CME Spot Cheddar market but sometimes this market has very few trades and can have wild price changes over a period of time without a single trade. There have been fines in recent years for manipulating this market levied on the dairy cooperative Dairy Farmers of America(DFA) who from my understanding both buys and sells on the market. The major question I have is when some months see zero or one trade, how difficult is it for someone like DFA to make a single bid to buy knowing that no one will sell and thereby setting the price at whatever they want it to be?
 
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marking positions on the close is a common thing across the board in all commodities usually done by the big houses. they put a legitimate bid or offer into the pit on the close and if it doesn’t trade they have to mark it there or between the bid ask. if they have huge positions in an illiquid market i’m sure it’s common. it could also be the locals, who because it’s such an illiquid market protect themselves by making really wide markets or they could also mark stuff on the close so they don’t have to come up with margin money. the dairy is actually traded right next to my pit and is about as big a good ole boys network as ive seen except maybe lumber.
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paul7979:
Missy PMQ:
Isn’t cheese still traded daily regardless?
Click to expand...
The problem is that the price of cheese nationwide seems to be set based upon the CME Spot Cheddar market but sometimes this market has very few trades and can have wild price changes over a period of time without a single trade. There have been fines in recent years for manipulating this market levied on the dairy cooperative Dairy Farmers of America(DFA) who from my understanding both buys and sells on the market. The major question I have is when some months see zero or one trade, how difficult is it for someone like DFA to make a single bid to buy knowing that no one will sell and thereby setting the price at whatever they want it to be?
Click to expand...
 
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Hasn’t been a single trade in the cheese market in three weeks yet the market is up over 10% in that time.
 
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It has now been over a month without a single trade and yet prices are up nearly 15% since the last trade on 2/20/14 and 46% up since this date last year.
 
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Just received this from one of my distributors, I’ll paste it here:
As you know the price of cheese is at an historic high. Activity at Chicago’s Board of Trade’s dairy section has been bullish and brisk. This activity has been going on for the past several weeks with not much weakness in sight.

Our current level has been a result of record demand for all types of dairy solids, cheese, butter, powder and milk. This demand level has been most strong from abroad. Several trade agreements that had been negotiated over the past couple of years finally began to take effect making our dairy products in the U.S. much more attractive to overseas buyers. As a result basic production shifted to react to this demand, now even our largest cheddar plants are at capacity, and when there is no cheddar for sale to fulfill the demand, prices go up. This time they are higher than ever.

So is there relief in sight? Sorry, but in my opinion not in the near future. All indications show strong demand from overseas, a weak dollar and a stable US economy. What could change this out look? Competition from New Zealand for the China and European demand for dairy solids, a stronger dollar against the Euro, the let out of schools before July and a kinder mother nature. All of these factors have come together in the past several weeks to give us the highest CME block market in history. So, as we have always said “Every ounce counts” MEASURE, MEASURE, MEASURE.

I just jammed in a (planned) sizable price increase last week to attempt to get our food costs back in line. It may not be enough if 2.20 - 2.40 is the new reality for the cheese market until more dairy cows “come online.”
 
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Wow, $2.40? I haven’t got cheese that cheap since the end of last year. Last week it was running $2.83 here for LM block mozzie.
 
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Even with the decreases, it’s still up around 20% over last year. Costing me well over $1000 per week more than it would at last years prices. Maybe we’ll see rock bottom lows like we did in 2009 after 2008’s record high prices, but I’m not very confident about that.
 
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I’m hearing it’s found a bottom for the short term. Everyone was expecting lower but there were some buyers early this morning.
 
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