Record Dairy Trades At CME

December 29, 2011 09:02 AM

Dairy trades reached record levels in 2011 on the Chicago Mercantile Exchange, reports Alan Levitt in to today’s Daily Dairy Report.

 Open interest in dairy futures and options is up nearly 70%, with Class III options leading the way with more than 84,000 positions.
“Cheese futures became the second most active contract traded in 2011, with open interests topping 7,600 yesterday (December 28),” reports Levitt. “Open interest on butter futures is up 76% to nearly 4,000 contracts.”
Liquidity in the dairy markets has always been an issue, but the increased activity in 2011 is likely due to both buyers and sellers becoming more comfortable trading dairy futures. Class IV (butter/milk powder) liquidity remains problematic, but even here, CME reports 2,334 open contracts (compared to less than 200 at the end of 2010.)
While the volume of trades and open interests in dairy is still dwarfed by those in corn, soybeans and wheat, it does surpass those of other commodities such as ethanol, oats, rice and lumber.

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