Friday, June 12, 2009
Obscuring the facts
Chart by Dairy Market News
(click to enlarge)
How many traders does it take to make a market? If the average dairy farmer knew how many entities are buying and selling cheese on the Chicago Mercantile Exchange they might not revolt, no time for that, but, they would be more angry, if that could be possible.
The whole charade is reinforced by the so-called National Agricultural Statistics Service (NASS) survey. USDA will tell anyone who complains about the CME, farm milk is not priced from the CME, farm milk is priced from many plants surveyed by NASS.
Here's how it works. The CME sets the price for block Cheddar on any given day. A plant which takes an order that day quotes the CME plus a formula. When the order is completed, NASS surveys the order as it goes out the door.
So, NASS is really CME plus a time delay. As the GAO said in their 2007 report on the CME, the NASS survey is a redundancy. Honestly, it is part of the con-game.